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Injunction

January 06, 2015

After reflecting upon the events of the past twelve months, Patent Docs presents its eighth annual list of top patent stories. For 2014, we identified eighteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) the greatest impact on patent practitioners and applicants. Previously, we counted down stories #18 to #15, #14 to #11, and #10 to #7. Today, we count down stories #6 to #4 as we work our way towards the top three stories of 2014. As with our other lists (2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look. As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know. In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2014" on January 20, 2015 from 10:00 am to 11:15 am (CT). Details regarding the webinar can be found here.

6. Federal Circuit Denies Myriad Motion for Preliminary Injunction

In March, the District Court for the District of Utah denied Myriad Genetics' motion for preliminary injunction in Myriad Genetics v. Ambry Genetics. Myriad had filed suit against Ambry for infringement of ten patents relating to genetic diagnostic testing less than a month after the U.S. Supreme Court announced its decision in AMP v. Myriad Genetics in June 2013. Ambry was one of the first companies to announce that it would provide genetic diagnostic testing for the BRCA 1 and BRCA 2 genes after the Supreme Court's Myriad decision. The litigation with Ambry was consolidated with five other infringement suits against Gene-by-Gene, Quest, GeneDx, Invitae, and LabCorp, and three declaratory judgment actions by Quest, Invitae, and Counsyl. Myriad then appealed the District Court's denial of the company's preliminary injunction motion. Last month, the Federal Circuit affirmed the District Court's decision denying Myriad Genetics' motion for a preliminary injunction in In re BRCA1- and BRCA2-based Hereditary Cancer Test Patent Litigation. The impact of the Federal Circuit's decision in the case (on the U.S. Patent and Trademark's recent interim subject matter guidance, for example) may well land this story on next year's list.

On June 2, the Supreme Court issued two decisions impacting patent law. In the first, Nautilus, Inc. v. Biosig Instruments, Inc., the Supreme Court reversed the Federal Circuit, overruling the "insolubly ambiguous" standard for patent claim indefiniteness. The Court discerned that § 112 "entails a 'delicate balance,'" wherein "[o]n the one hand, the definiteness requirement must take into account the inherent limitations of language," while on the other hand "a patent must be precise enough to afford clear notice of what is claimed, thereby " 'appris[ing] the public of what is still open to them.'" According to the Court, this inherent ambiguity cannot become so great that it creates a "zone of uncertainty" around the patent claims, which would discourage innovation without any benefit to the public. And the Court was apparently persuaded that "patent applicants face powerful incentives to inject ambiguity into their claims" unless countervailing disincentives (in the form of being put at risk of being invalidated) are in place. Being "[c]ognizant of the competing concerns," the Court announced its test for indefiniteness, stating that "we read §112, ¶2 to require that a patent's claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty," noting that "[t]he definiteness requirement, so understood, mandates clarity, while recognizing that absolute precision is unattainable."

In the Supreme Court's other June 2 patent-related decision, Limelight Networks, Inc. v. Akamai Technologies, Inc., the Court again reversed the Federal Circuit, determining that a defendant is not liable for inducing infringement of a patent under 35 U. S. C. § 271(b) when no one has directly infringed the patent under § 271(a) or any other statutory provision. The Court declared that "our case law leaves no doubt that inducement liability may arise 'if, but only if, [there is] . . . direct infringement.'" The Court noted that "the Federal Circuit reasoned that a defendant can be liable for inducing infringement under §271(b) even if no one has committed direct in­fringement within the terms of §271(a) (or any other pro­vision of the patent laws), because direct infringement can exist independently of a violation of these statutory provi­sions." However, as the Court explained, "there has simply been no infringement of the method [of Akamai's U.S. Patent No. 6,108,703], because the performance of all the patent's steps is not attributable to any one person," and "where there has been no direct infringement, there can be no inducement of infringement under §271(b)." In addition, the Court refused Akamai's request to review the merits of the Federal Circuit's rule from Muniauction, Inc. v. Thomson Corp. for direct infringement under § 271(a), noting that the question presented clearly focused on § 271(b), and not § 271(a).

May 28, 2014

Due to the complexity of Australian patent litigation, it can take more than 18 months for a patent dispute to be finally determined by a judge. This is more than enough time for an infringing competitor to irreversibly damage the patentee and its exclusive market. Interlocutory injunctions (also known as preliminary injunctions) are designed to prevent competitors from marketing their products before the court finally determines whether they infringe (or the patent is invalid).

Australian courts appear strongly inclined to grant interlocutory injunctions, and within a very short period of time, in pharmaceutical patent disputes. Annexure 1 (below), which outlines 16 interlocutory injunction applications filed by pharmaceutical patentees since 2005, shows that only three of those applications were rejected. Annexure 1 also demonstrates that, if necessary, the courts will hear an interlocutory injunction application and deliver its judgment very quickly (in as little as four days) to protect the patentee's market. This article provides a brief introduction to interlocutory injunctions in Australia and explains why innovator pharmaceutical companies are likely to be granted interlocutory injunctions in Australian patent disputes.

BACKGROUND TO INTERLOCUTORY INJUNCTIONS IN AUSTRALIA

Determination of the Application

Applications for interlocutory injunctions are heard at first instance by a single judge of the Federal Court of Australia. The court will grant an interlocutory injunction against an alleged infringer (such as a generic) if it is satisfied that:

(a) the patentee has a prima facie case; and

(b) the balance of convenience lies with granting the injunction.

Prima Facie Case

A patentee has a prima facie case if there is a probability that they will succeed at final trial (i.e., it is arguable that (a) infringement has occurred and (b) the patent is valid). An invalidity case must verge on the irresistible to defeat a prima facie infringement case.

When deciding whether the patentee has a prima facie case, courts are usually reluctant to consider legal or factual disputes in any detail because:

(a) the court is only required to consider whether the patentee's case is arguable, rather than reach a final conclusion; and

(b) while both sides will make submissions and put on evidence, they are seldom as comprehensive as would be adduced for a final trial, and witnesses are rarely cross-examined, limiting the court's ability to choose between them.

Instead, the court will typically simply acknowledge that both positions are arguable, and find that the patentee has established a prima facie case. Accordingly, this element is usually quite easy to satisfy.

Balance of Convenience

When considering whether the balance of convenience favours granting the interlocutory injunction, the court will weigh up all of the surrounding factors.

First, the court will consider the harm that the patentee may suffer if an interlocutory injunction is refused and a final injunction is subsequently granted, and whether that harm can be compensated by way of damages. The greater the patentee's potential loss, the more likely the court is to grant the injunction, particularly if it cannot be adequately compensated by damages (such as reputational damage). Patentees often argue that allowing the generic onto the market will:

(a) reduce the patentee's sales and force it to lower its prices to compete with the generic, affecting profit;

(b) cause flow-on losses to other areas of the patentee's business, including reputational damage, reduced opportunities to promote other products and the forced reduction in expenditure on research and development and marketing, damaging future revenue streams; and

(c) encourage other generics to enter the market, causing further damage to the patentee and significantly complicating the assessment of how damages should be apportioned between the generics.

The patentee's potential harm is a particularly strong factor if the generic intends to list their product on the Schedule of Pharmaceutical Benefits (Schedule) under the Pharmaceutical Benefits Scheme (PBS).

By way of background to Australian drug regulation and subsidisation, pharmaceutical products cannot be marketed in Australia unless they are registered on the Australian Register of Therapeutic Goods (ARTG). If a prescription medicine is registered on the ARTG, the sponsor may also apply to list it on the Schedule. The PBS is administered by the Australian government and seeks to subsidise the cost of medicines to the public. The Australian government sets the price of all products listed on the Schedule (PBS Price). Patients who purchase a listed prescription medicine from a pharmacy are required to pay a set proportion of the PBS Price, with the Australian government reimbursing the pharmacy with the balance of the PBS Price. If a generic version of an innovator product is listed on the Schedule, the PBS Price paid by the government for that product (and therefore the amount that pharmacies will pay the innovator for its product) is automatically reduced by 16%. If the generic offers its product at a discount to the innovator product, as is often the case, the PBS Price may be decreased even further. Importantly, a decrease in the PBS Price is virtually always irreversible.

Accordingly, if a generic is permitted to list their product on the Schedule, the innovator will be paid a reduced PBS Price over the life of the patent, irrespective of whether they are successful in obtaining a final injunction, causing the patentee significant and continuing loss. This potential loss will often persuade a court to award an interlocutory injunction because:

(a) it is likely to be very significant; and

(b) assessing the patentee's continuing loss caused by the reduced PBS Price is difficult because it involves estimating future sales.

The court will consider whether the generic will suffer any loss if the interlocutory injunction is granted and the patentee's infringement argument is rejected at the final trial. Generics often refer to:

(a) the advantage of being the first competitor to market, both in terms of market share for that product and flow-on effects to other products; and

(b) the difficulty of estimating what would have been the generic's market share, and therefore calculating their profit, had the interlocutory injunction been refused.

As generics tend to significantly discount their products, their potential loss is typically much less than that of a patentee. Further, it is often argued that a generic who elects not to revoke a patent before entering the market knowingly takes the risk of having an interlocutory injunction awarded against them, such that their loss is self-inflicted. Courts regularly use this argument to reduce the weight given to a generic's loss.

The strength of the patentee's infringement case, compared with the strength of the generic's invalidity case, is also relevant. If the patentee has a strong case, the court will be more likely to award the interlocutory injunction. Conversely, there is less inclination to award an interlocutory injunction if the patentee appears unlikely to succeed at the final trial.

Any unreasonable delay from the patentee in bringing the interlocutory injunction action will also weigh against its grant.

Prospects of Success

For the reasons given above, particularly:

(a) the low standard of proof required to establish a prima facie case;

(b) the patentee's perceived greater extent loss (especially if the product is listed on the Schedule);

(c) the common discounting of a generic's loss as being self-inflicted; and

(d) the possibility of other generics entering the market;

Australian courts are strongly inclined to grant interlocutory injunctions.

This tendency is highlighted by the table at Annexure 1, which lists 16 interlocutory injunction applications filed by pharmaceutical patentees since 2005 and shows that only three applications were rejected. An analysis of those rejected applications shows that two were the result of the application of a different (more generic-friendly) law to that which currently stands in Australia (in combination with the atypical circumstances of the patentee's unreasonable delay or the generic's undertaking not to list on the PBS), while the third was a result of the patentee having a weak infringement case.

(a) The court in Hexal v Roche held that, for an interlocutory injunction to be awarded, Roche (the patentee) must show that it would suffer irreparable harm. As discussed above, potential irreparable harm now forms part of the assessment of the balance of convenience, rather than its own separate prerequisite. It was found that Roche could be adequately compensated by damages, partly because Hexal undertook not to apply to list its product on the Schedule. Notably, the rejection of the application was accompanied by a warning from the court that the parties should prepare for the final trial as quickly as possible to minimise Roche's potential harm, and that a failure to do so "might well justify reviewing the decision".

(b) Like Hexal v Roche, the court in Interpharma v Aventis required Aventis (the patentee) to show that it would suffer irreparable harm. Damages were found to adequately compensate Aventis because the patent would expire within 18 months and the relevant market (chemotherapy medication) was not overly competitive. The court's decision was also swayed by Aventis' unreasonable eight month delay in filing its interlocutory injunction application.

(c) In Warner-Lambert v Apotex, the court refused the interlocutory injunction application because Warner-Lambert did not establish a prima facie case. Its patent was directed to the use of pregabalin for treating pain. Apotex did not infringe because (i) its ARTG registration only indicated the use of pregabalin as an adjunctive therapy for preventing seizures and (ii) its promotional material clearly stated that pharmacies could not dispense its product without a prescription explicitly stating that it was required for treating seizures.

Timing of the Interlocutory Injunction

Annexure 1 also demonstrates that, if necessary, the courts will hear an interlocutory injunction application and deliver its judgment very quickly (in as little as four days in the case of GenRx v Sanofi-Aventis). While there is no indication in the GenRx v Sanofi-Aventis judgment as to why a decision was required so quickly, such reasons are given in other cases.

(a) In Abbott v Apotex, judgment was delivered on 20 November 2009, 18 days after the interlocutory injunction application was filed, because Apotex had threatened to bring product onto the market on 21 November 2009.

(b) An interlocutory injunction was granted in Apotex v AstraZeneca within 15 days because Apotex had already commenced its marketing campaign and was ready to launch its generic product onto the market.

(c) In Warner-Lambert v Apotex, Apotex advised Warner-Lambert on 14 February 2014 that it would bring its generic product to market on 14 March 2014. Warner-Lambert commenced proceedings on 25 February 2014, meaning the court was required to (and did) decide the interlocutory injunction application within just 17 days.

Pressure-Testing a Case

An interlocutory injunction application in Australia also provides an excellent opportunity for a patentee to test the strength of their case. The generic is required to reveal (at least part of) its non-infringement and invalidity evidence and arguments, and the judge may provide some preliminary comments in relation to both parties' cases. Furthermore, an interlocutory injunction application is much less expensive than a final trial, and can be decided very quickly if required. It can accordingly provide an indication of the patentee's likelihood of ultimate success (both in Australia and internationally) quite quickly and relatively inexpensively. Even if the patentee discovers that their case has significant weaknesses, for the reasons discussed above they would nonetheless have good prospects of succeeding with respect to the interlocutory injunction, strengthening their position during any settlement negotiations with the generic.

Conclusion

The combination of high success rates and fast judgments means that Australia is currently a jurisdiction that favours pharmaceutical patentees seeking interlocutory injunctions. Further, the insight gained into the strength of the patentee's case can be invaluable, allowing a more productive consideration of whether to enforce a patent in Australia and abroad.

Annexure 1 (click on table to enlrage)

Mr. Mullane is a Lawyer with Wrays; Mr. Humphris is a Principal with Wrays and Senior Member of Wray's Adelaide Chemical and Biological team; and Mr. Shand is a Principal with Wrays.

March 11, 2014

In a 106-page opinion, U.S. District Court Judge Robert J. Shelby on Monday denied Myriad Genetics motion for preliminary injunction in Myriad Genetics v. Ambry Genetics. Characteristic of its aggressive defense of its patent rights, the motion was, as the District Court noted, for "extraordinary" relief and thus not routine nor was the Court expected to grant the motion. The Court's detailed explication of the history of the Myriad case and the contentions of the parties will be set forth in a later post. This post is concerned with the outcome, and the grounds that the District Court relied upon in denying the motion.

The standards for a preliminary injunction are four: the patentee has to establish a likelihood of success on the merits, that she will be irreparably harmed should the injunction not issue, that the balance of the hardships is in the patentee's favor, and that the public interest is not harmed if the court grants the injunction. The District Court found in Myriad's favor on only one of these grounds, that of irreparable harm. This finding was based on expert testimony from Myriad's damages expert, whose testimony the Court credited with regard to the effects on market entry by Ambry (and others) on determining the amount of damages owed should Myriad prevail, particularly with regard to the likelihood that Myriad would be undercompensated in view of the "complex pricing and sales factors in the case." The Court also cited the unlikelihood that Myriad would be able to reverse the price erosion expected to occur with market entry of Ambry and other competitors.

The rest of the prongs of the test were in Ambry's favor according to the District Court's opinion. With regard to the balance of the hardships, the Court was not persuaded by Ambry's argument that its loss of its "head start" offset any harm to Myriad's franchise, the Court stating that "[the fact t]hat Myriad is a large company and can survive an injunction does not compel the Court to conclude that Defendant's loss of a head start outweighs Plaintiffs' loss of return on its years of work and substantial investment commercializing BRCA testing." The Court was persuaded the argument that Ambry might go out of business if the injunction should be imposed, rejecting as inapposite cases from the Federal Circuit discounting this risk to the defendant. "Notwithstanding the court's conclusion that Plaintiffs will suffer irreparable harm without an injunction," the District Court found that the balance of the hardships tilted in favor of Ambry, which could lose its business against the harm to Myriad, which is merely economic for a company "has enjoyed an exclusive monopoly in the BRCA1 and BRCA2 testing market for nearly two decades, and its own financial forecasts show that it expects to see increased revenue growth this year." The Court further stated that "[e]ven without an injunction, Plaintiffs will undoubtedly continue to benefit from Myriad's expertise, market strength, and brand name recognition" as reasons supporting its finding that the hardships balanced in Ambry's favor.

As for the public interest, the District Court stated that "both sides make compelling arguments that the public interest favors them." Accordingly, the Court found that neither side "has shown that the public interest mandates either the imposition or denial of Plaintiffs' requested injunction."

The most significant portion of the opinion is the District Court's finding that Myriad had not only failed to show a likelihood of success on the merits but that Ambry had introduced sufficient evidence to convince the Court that Myriad was unlikely to prevail and that the claims were invalid for reciting patent-ineligible subject matter. Portions of the Court's opinion should come as no surprise: the Court found that the primer and probe claims asserted by Myriad and argued to be patent-eligible subject matter because they were synthetic were not patent-eligible because they had the same sequence found in genomic DNA (a truer reading of the Supreme Court's AMP v. Myriad Genetics opinion than Myriad's interpretation of that opinion). More troubling is the District Court's determination that the asserted method claims are also patent-ineligible, relying in large part on the reasoning by Judge Illson of the Northern District of California in Ariosa Diagnostics v. Sequenom, Inc. (currently in the briefing stage before the Federal Circuit). That exercise in patent illogic has been discussed earlier; that the Utah District Court finds this reasoning persuasive is unhappy news for Myriad (as well as many other genetic diagnostic companies).

There is one other interesting quotation from the District Court's opinion that deserves comment; according to the Court:

The practical result of Myriad's patents has been to hinder or halt follow-up research, data sharing, patient testing, and the creation of additional and more affordable technologies for BRCA1 and BRCA2 testing. For example, since about 2005, Myriad has declined to publicly share critical information regarding its classification of variants, including with its own patients. Instead, Myriad retains that information in a private database.

In so doing, Myriad distorts rather than serves the patent system's goal of public disclosure in exchange for exclusive rights. In this way, Myriad has chosen a commercial path that turns much of our patent system policy on its head.

Once again, Myriad's competitors have stolen the march in the public relations arena, even with a Utah judge, who makes these statements while acknowledging elsewhere in the brief Myriad's efforts to provide testing for women who cannot afford it and to arrange insurance reimbursement for those having health insurance. Perhaps Myriad invited this outcome by asking for a preliminary injunction, which with its considerations of the public interest invite "expert" witness statements supporting this negative view. But it does raise the question (stated somewhat differently by a prominent biotech patent attorney), "Since when does a patentee lose the right to assert her patent just because she acts like a jerk." Appearances have been a motivating factor and a persuasive influence throughout the Myriad saga, and it is about time that Myriad acts to counter the perception that the company, and its patents, have been a hindrance rather than a help in bringing BRCA testing, and the accompanying health, social and economic benefits to U.S. women.

Hat tip to Joe Allen for pointing out the quoted portions of the brief.

August 14, 2013

The
Federal Circuit vacated and remanded a District Court decision denying a
preliminary injunction to patentee Sequenom over the claims of U.S. Patent No.
6,258,540. While the Court rendered its decision
based on traditional principles of claim construction and the lower court's
balancing of the equitable factors considered for granting preliminary
injunctions in patent cases, the decision also bears consideration in view of
the panel's mention of whether the claims at issue were patent eligible under
the Supreme Court's recent AMP v. Myriad
Genetics decision.

The
claims of the '540 patent (owned by Isis Innovation Limited and exclusively
licensed to Sequenom) are directed towards detecting paternal DNA sequences
derived from a fetus in maternal circulation from a pregnant woman.Claim 1 is representative:

A method for detecting a paternally
inherited nucleic acid of fetal origin performed on a maternal serum or
plasma sample from a pregnant female, which method comprises amplifying a paternally inherited
nucleic acid from the serum or plasma sample and detecting the presence of a paternally
inherited nucleic acid of fetal origin in the sample.

(emphasis
in the opinion). Sequenom's commercial
product (and Aria's) is directed to diagnosing trisomy disorders (Down's,
Edwards and Patau) in the fetus by detecting these disorders from "non-nucleated
free-floating fetal DNA (cffDNA) in maternal blood. This test is much less invasive than
traditional amniocentesis (and poses no risk to the developing child, unlike
amniocentesis) and avoids the necessity of isolating the "rare nucleated
[fetal] cells" that can be found in maternal blood. Fortuitously, it appears that women bearing a
trisomy-affected child have more cffDNA in their blood than women bearing an
unaffected child. As the result of these
biological phenomena the test is not only safer but also more reliable in
providing a diagnosis.

Aria
(now, Ariosa) Diagnostics filed a declaratory judgment action that its genetic
test, termed "Harmony," did not infringe Sequenom's claims, and
Sequenom counterclaimed for patent infringement and asked for a preliminary
injunction, which the District Court denied.

The
Federal Circuit opinion, by Chief Judge Rader, joined by Judges Dyk and Reyna,
begins with the standard for appealing denial of a preliminary injunction: not
only that at least one of the District Court's factual finding was clearly
erroneous, but that the court abused its discretion in denying the injunction,
citing Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed.
Cir. 1994). While the parties disagreed
over the extent to which claim construction is determinative in the preliminary
injunction context (the opinion invites a comparison between Chamberlain
Group, Inc. v. Lear Corp., 516 F.3d 1331, 1340 (Fed. Cir. 2008), and Int'l
Cmty. Materials v. Ricoh Co., 108 F.3d 316, 318-19 (Fed. Cir. 1997)), here "the
court need not reach out to comment on those alternative approaches to the
question" because "[e]ven under the ostensibly more relaxed standard,
the district court erred in its claim construction" and "[a]s a
consequence, the district court erred in finding a substantial question of
noninfringement." In this regard
the panel reviewed construction of the terms "paternally inherited nucleic
acid" and "amplifying" in the claims. With regard to the term "paternally
inherited nucleic acid," the District Court held the term to mean "DNA
sequence known [in advance] to be received only from the father which is not
possessed by the mother." (Note
that while the District Court did not include the bracketed [in advance] in its
claim construction order it is undisputed that it must be known "in
advance" that the sequence is derived from the father and not the mother
for the test to be diagnostic.) Thus,
for infringement to arise the user must know the father's genotype, and this
requirement renders the District Court's claim construction incorrect according
to the panel.

The
reason for this determination by the Court is that this requirement is not part
of the plain meaning of the term "paternally
inherited nucleic acid," nor is it supported by the specification; indeed, the panel opinion asserts that this
interpretation is based on a single sentence from the '540 patent
specification: the "method according to the invention can be applied to
the detection of any paternally-inherited sequences which are not
possessed by the mother." The opinion does not find this sentence to be
limiting but rather an expansive statement "reflect[ing] the broad meaning
of 'paternally inherited nucleic acid' that is found in the claims -- a meaning
which does not limit them to those known in advance to have come from the
father." In the panel's opinion the
term encompasses any paternal characteristics
by comparison to maternal characteristics (emphasis in opinion), not a
limitation only to those paternal nucleic acids identified in advance.

The
Court also found that this construction was not consistent with other portions
of the specification, particularly the examples. For instance, Example 3 expressly recites a
prior determination of the mother's RhD negative status but is silent as to a
similar determination of the father's RhD gene; although this example detects
the RhD gene allele inherited by the fetus from the father there is no teaching
that the father's RhD gene was known in advance. Thus, even if the claims were limited to what
was expressly disclosed in the examples (an outcome the panel specifically
points out is not the claim construction standard), Example 3 illustrates
embodiments of the invention falling outside the District Court's construction
of the term.

Regarding
the prosecution file history, the Court also found no support for limiting the "paternally
inherited nucleic acid" term to paternal DNA known in advance. The panel assessed three incidents asserted
in support of the District Court's construction. First, the claims were amended to recite the "paternally
inherited nucleic acid limitation" during prosecution to secure an
allowance, but the Court found that this portion of the prosecution history
does not require prior knowledge of the paternally inherited sequence. Second, during prosecution of a related
continuation application Isis argued that the claims should not be limited to
paternally inherited nucleic acids, citing instances where DNA distinct for the
fetus (such as due to "spontaneous" or "chance" changes or
mutations or other fetus-specific differences between fetal and maternal
nucleic acids. However the Court did not
find these arguments to "approach the clear and unequivocal statement
needed before prosecution history can operate to extinguish subject matter
otherwise within the claims." Third, with regard to those continuation application claims, the examiner
asserted that the specification did not enable detection of chromosome 21 "caused
by maternal inheritance or genetic mutation," but the panel found these statements to be
too ambiguous to support Ariosa's arguments or the District Court's claim
construction (as well as being directed to an issue, enablement, not considered
by the District Court).

Because
the District Court erred in imposing this limitation on the claims, the Federal
Circuit held that the District Court erred in finding that Ariosa had raised a
substantial question of noninfringement precluding grant of a preliminary
injunction to Sequenom.

Regarding
the term "amplifying," the District Court construed the term to mean "increasing
the concentration of a paternally inherited nucleic acid relative to the other
DNA in the sample." Under this
construction, only paternally derived DNA would be amplified, not the fetal DNA as
a whole. This was error, according to
the Federal Circuit, because the plain meaning of the claims require that
paternally derived nucleic acid is amplified "without any mention of an
effect on the quantity of other nucleic acid" and thus the claims would be
infringed "whether, or not, other nucleic acid is amplified." The specification is contrary to the District Court's construction, according to the panel, citing passages from the
specification that distinguish between "amplification" and "enrichment"
of paternally inherited nucleic acid. The
panel concluded that "the specification does not support, but instead
points away from the district court's claim construction, which already is at
odds with the plain language of the claim." And the prosecution file history is no less
availing: the examiner's statements cited to support the District Court's
construction of the "amplifying" term are directly related to enrichment
rather than amplification according to the panel because "[t]he examiner
could not have been objecting to lack of support for amplification, because
amplification was described through traditional PCR and other methods." As with its erroneous construction of the "paternally
inherited nucleic acid" term, the Federal Circuit found that the District Court had incorrectly construed the "amplifying" term and thus erred
in concluding that Ariosa had raised a substantial question of noninfringement.

Finally,
the District Court had found that there was "a substantial question over
whether the subject matter of the asserted claims was to eligible subject
matter." Noting the intervening
decision by the Supreme Court in the Myriad
case, the panel's remand instructs the District Court to consider the subject
matter eligibility question. However:

To be clear, this court
offers no opinion as to whether there is or is not a substantial question
regarding the subject matter eligibility of the asserted claims. This court
merely concludes that in light of Myriad and the different claim
construction, this court would benefit from the district court's initial and
further consideration. On remand, the district court may once again consider
this issue, as well as whether there is a substantial question of validity of
the asserted claims under other defenses raised by Ariosa but not reached
previously by the district court.

To
be equally clear, the claims of the '540 patent do not claim isolated
paternally inherited nucleic acid per se and thus should fall outside the ambit
of the Supreme Court's Myriad
decision. The question that will need to
be addressed is whether these claims recite diagnostic method claims that
remain patent eligible under the Court's Mayo
v. Prometheus Labs. decision, both a different question and one for which it
is much harder to predict an outcome.

The
Court also provided "additional guidance" to the District Court with
regard to its application of the other equitable factors (irreparable harm,
balance of the hardships and the public interest) should the lower court find
in Sequenom's favor on the "likelihood of succeeding on the merits"
prong of the preliminary injunction test. Concerning the "irreparable harm" prong, the District Court
found that "price and market erosion would occur," these being
factors that can be used to support a preliminary injunction (for example,
under Celsis in Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930
(Fed. Cir. 2012)). The District Court
cited four reasons why Sequenom's showing of harm was not sufficient to satisfy
this prong of the test. First, the Court
found that the market and price erosion were not "irreparable"
because Sequenom's superior product (if it turned out to be so) would recover
the market and receive damages for any infringement. The panel found this to be an assumption
rather than a fact and said that "[i]n the face of that kind of universal
assumption, patents would lose their character as an exclusive right as
articulated by the Constitution and become at best a judicially imposed and
monitored compulsory license." Second, the Court found that Sequenom's expert witness had not
demonstrated the "degree" of price and market erosion adequately,
because he had not considered other, potentially rival tests. In addition to the contingent and speculative
nature of this assessment, the panel noted that the "'fact that other
infringers may be in the marketplace does not negate irreparable harm,"' citing
Pfizer, Inc. v. Teva Pharm. USA, Inc., 429 F.3d 1364, 1381 (Fed. Cir.
2005). Next, the District Court found
that granting a preliminary injunction "would put Ariosa out of business." While such a showing can be a factor (seeIntel Corp. v. ULSI Sys. Tech., Inc., 995 F.2d 1566, 1568, 1570 (Fed.
Cir. 1993)) it does not control the "balance of the hardships" prong
of the standard, citing Bell & Howell Document Mgmt. Prods. Co. v. Altek
Sys., 132 F.3d 701, 708 (Fed. Cir. 1997). The panel indicated that the District Court will need to educe evidence
of the balance of the hardships (i.e., on Sequenom if the injunction is
denied as well as Ariosa if it is granted) to properly establish where the
balance of the hardships lies. Finally,
the Court noted that at least some of the grounds used by the District Court in
finding in favor of Ariosa on the public interest prong was that Ariosa
marketed its Harmony test to both "high- and low-risk women"
(approximately 3.5 million) while Sequenom made its test available only to
high-risk women (e.g., over 35 years
of age and amounting to about 750,000 women). The panel noted that more recently "an expert organization had
warned that cffDNA tests should not, yet, be used in low-risk women. Am. Coll.
of Obstetricians and Gynecologists Comm. on Genetics, Noninvasive Prenatal
Testing for Fetal Aneuploidy, Op. No. 545 (Dec. 2012). This report raises questions that the panel
should consider when rendering its decision on Sequenom's preliminary
injunction motion on remand.

February 28, 2013

On
the first day of February, the Federal Circuit rejected Impax's efforts to get
out from under a preliminary injunction in a case captioned In re Cyclobenzaprine Hydrochloride
Extended-Release Capsule Patent Litigation. The opinion wasn't released until February 14, 2013, however, because it
contained confidential information that needed to be redacted. The Federal Circuit also interpreted the
settlement agreement between Impax and Cephalon (the patent holder), confirming
the lower court's decision that the ability of Impax to begin selling
generic AMRIX® under the agreement had not been triggered. As a result, the discussion regarding the
preliminary injunction was somewhat irrelevant, because Impax was otherwise
precluded from marketing the drug. The decision
in this Eurand, Inc. v. Impax Labs., Inc.
case is somewhat limited to the facts, because the injunction and settlement
agreement discussed by the Court were specific to this case. Nevertheless, a review of the Court's
reasoning and analysis is relevant because other parties involved in
Hatch-Waxman litigation may find themselves in similar situations.

This
substantive issues related to validity for this case were discussed in detail
in a Federal Circuit opinion of the same name that was handed down last year,
as reported here. The drug that was at issue in all of these cases
was an extended-release formation of the muscle relaxant cyclobenzaprine
hydrochloride, manufactured and sold under the tradename AMRIX® by
Cephalon. Shortly after receiving the
NDA for this formation, Mylan Inc. and Mylan Pharmaceuticals, Inc. (collectively
"Mylan") filed an ANDA to market a generic version of the drug,
followed shortly by several other generic manufactures, including Impax. The Federal Circuit ultimately found that the
patents-at-issue in the case were valid and infringed by the various parties.

Nevertheless,
Cephalon and Impax settled their dispute on the last day of trial. In the settlement agreement, Cephalon granted
Impax a non-exclusive license to the patents-in-suit, the timing of which was
controlled by five different potential triggering events, the first (and
latest) of which was the date one year prior to the expiration of one of the patents
in suit. The other events were tied to "Third-Party"
generic manufacturers entering the market, whether by authorization, by
launching "at risk," or by obtaining a final non-appealable judgment
of non-infringement, invalidity, or unenforceability. The parties also entered a "Transfer
Price Agreement" ("TPA"), by which Impax agreed to market and
sell Cephalon's generic AMRIX®, and Cephalon began supplying its generic
product to Impax.

Cephalon
also entered a "Sales Agent Agreement" with another generic
manufacturer, Watson. However, under
this agreement, Watson was only given authority to solicit orders for
Cephalon. In fact, Cephalon maintained
title of the drugs at all times until the drugs were transferred to the final
customer. Watson was foreclosed under
the agreement to market or sell any other version of the drug.

After
the bench trial, on May 12, 2011, the District Court issued its decision,
finding the asserted claim invalid as obvious. Mylan launched "at-risk" the next day. In response, Cephalon instructed Watson to
begin soliciting orders. On May 24,
2011, the District Court enjoined both parties, along with all persons "acting
in active concert or participation" with them, from selling their
respective generic versions of the drug, in order to maintain the status quo
pending appeal. On November 7, 2011,
Mylan asked the lower court to confirm that the injunction covered parties in privity
with Cephalon, because Mylan had become aware that other generic manufacturers
were planning to launch at the end of the 180-day marketing exclusivity
period. As a result, the District Court
clarified its injunction by explicitly referencing that Impax was subject to
the injunction. Incidentally, because
the lower court issued its May 2011 injunction after Mylan launched, Mylan lost
almost all of its exclusivity period. This may have been a more contentious point, but for the fact that the Federal
Circuit overturned the lower court's validity decision.

Impax
moved to modify both the May and November 2011, injunctions, and to enforce
the settlement agreement by clarifying that Watson's launch was a triggering
event for its own ability to enter the market. The lower court confirmed that the May 24 injunction, as clarified by
the November 8 order, was still in effect and that it prohibited Impax from
selling any generic product. It also
concluded that Cephalon's use of Watson as a sales agent did not trigger Impax's
right to begin selling its supply of Cephalon's drugs under the settlement
agreement. Impax appealed.

No
Jurisdiction to Review Injunction

The
Federal Circuit determined that Impax was subject to the May 2011 injunction,
and that because Impax did not object to that injunction within the requisite
30 days, it did not have jurisdiction to review the propriety of the
order. The May 24, 2011 injunction
prevented Mylan, Cephalon, and all persons "acting in active concert or
participation" with these parties, from selling a generic version of
AMRIX®. Impax had argued that it was not
subject to this injunction because it was not a party to the action when the District Court issued the injunction. The Federal
Circuit pointed out, however, that Impax was a party that was "acting in
active concert or participation" with Cephalon. Impax derived its right to sell generic
AMRIX® from the Cephalon-Impax Agreement, and it could have only entered the
market because of the settlement agreement. Therefore, there was privity of contract between Impax and Cephalon,
because a settlement agreement is akin to a contract. Also, if Impax had attempted to sell the
authorized generic product pursuant to the TPA, it would have been directly "acting
in concert" with Cephalon. As the
Court pointed out, any alternative result would have allowed Cephalon to
circumvent the injunction by funneling its generic product to Impax.

Impax
also contended that the District Court's November 8, 2011 order modified the
May 24, 2011 injunction, and its appeal of this modification was timely. However, because Impax was subject to the
earlier injunction, the Federal Circuit pointed out that the District Court's
clarification made no substantive changes. Therefore, the November 8, 2011 order did not give rise to an
independent right to appeal.

In
a final attempt to modify the injunction, Impax argued that it timely appealed
the District Court's denial of its attempt to prospectively seek modification
of the injunction. The Federal Circuit agreed
that it would have had jurisdiction over a modification of an injunction, or
denial thereof, citing 28 U.S.C. § 1292(a)(1). However, such review would be limited to the propriety of the denial,
not the underlying injunction. The Court
rejected Impax's assertions that the circumstances had changed since the May
24, 2011 order was issued. First, Impax
asserted that it had been just recently added to the injunction, but the Federal
Circuit had already addressed this issue. Second, Impax alleged that the injunction needed to be modified because
Mylan's exclusivity period had expired. However,
the length of this exclusivity period was known at the time of the original
injunction, and therefore the predicted end of this period had no bearing on
Impax's rights. Finally, Impax argued
that its receipt of authorized generic product from Cephalon somehow warranted
modification of the injunction. However,
the May 24, 2011 order prohibited sale of these products, and Impax had
received them months before it sought to modify the order. Therefore, the Court did not consider this to
be a "changed circumstance." As a result, the Federal Circuit found no support for a modification of
the injunction.

Cephlon's
Appointment of Watson as Sale Agent Was Not A Trigger Event Under The Contract

The
Federal Circuit also addressed Impax's challenge to the lower court's
interpretation of the settlement agreement. On its face, the Federal Circuit's decision should not extend beyond the
contract between Cephalon and Impax. However, because Court reasoning is applicable to the interpretation of
other settlement agreements, it is worth reviewing. Interestingly, for the present, this aspect
of the decision appears to be irrelevant, because according to the District Court's docket, Impax is still subject to the preliminary injunction (and
therefore couldn't sell any drugs anyway). In other words, regardless of whether an event had triggered Impax's
ability to sell generic AMRIX® under the settlement agreement, Impax was still
barred from launching until the District Court lifts the injunction.

The
relevant section of the settlement agreement is Section 3.2, in which five
different "triggering events" dictate when Impax can enter the
generic market. The "trigger"
in dispute is the third, which provides that Impax may enter the market on:

[T]he same entry
date that any Third Party which is not entitled to First to File Exclusivity is
licensed or authorized by [Cephalon] to begin selling Generic Equivalent
Product in the Territory.

Impax
alleged that Watson was such a "Third Party," but the Court
disagreed. A "Third Party" was
defined in the agreement as a party that is not Anesta, Eurand, Cephalon,
Impax, nor any of their affiliates. As
such, Cephalon's entry into the market was not defined to be a triggering
event. And, because Watson was no more
than a sales agent for Cephalon, Watson was
Cephalon based on the agreement.

Important
in this determination was the fact that Cephalon was merely using Watson's
expertise and distribution channels. Watson had not filed its own ANDA to the product. In fact, Watson was only soliciting orders,
and was required to notify potential customers that it was only Cephalon's
sales agent. Moreover, Cephalon retained
the right to set price floors, and retained title until the drugs were
transferred to the customer. Because
Watson never obtained title to the product, it could not "sell" the
generic drugs within the meaning of § 3.2(c). The Court pointed out that if Watson was, in fact, characterized as a "Third
Party," it would have meant that Cephalon would have needed to operate the
entire production and distribution chain of its own generic product to avoid
triggering Impax's ability to launch. Otherwise, any party that would have aided Cephalon would have been
considered a "Third Party." The Court pointed out that this was a nonsensical result.

The
Federal Circuit concluded by noting that this provision in the settlement
agreement was meant to act as a "most favored nation" clause. In other words, it was protection for Impax
from losing market share from other generic manufacturer, whether they were
authorized or whether they launched at risk. This should serve as a warning to any generic company (or branded
pharmaceutical company for that matter) to make sure any equivalent situations
are properly addressed in any settlement agreements -- otherwise a similar
outcome is almost guaranteed.

October 15, 2012

Last
week, in Hoffmann-La Roche Inc. v. Apotex
Inc., the Federal Circuit affirmed the denial of a request for a
preliminary injunction from the U.S. District Court for the District of New
Jersey related to the sale of Roche's osteoporosis drug Boniva®. The lower court had found that Roche failed
to establish a reasonable likelihood that it would prevail against the
obviousness challenges from the ANDA filers in the case. Because the majority of the three-judge panel
of the Federal Circuit believed that the lower court did not abuse its
discretion in denying the request, the decision was affirmed. However, Judge Newman dissented because she
believed, in part, that the lower court and the majority did not properly
consider the equities in the case. The dissent
summed up the case with the statement: "[t]he only issue on this appeal is
whether to preserve the status quo during this litigation, or whether to change
it irretrievably." Judge Newman
disagreed with the majority because, according to her, not only did the
equities favor an injunction for Roche, but if the lower court had not ignored
the evidence of unpredictable results in the art, it would have found that
Roche had established a reasonable likelihood of defending the validity of its
patents.

Boniva®,
the drug at issue in this case, is approved by the FDA as a once-monthly
treatment of osteoporosis in post-menopausal women. The active ingredient is ibandronate, the use
of which was already known in the art for the treatment for osteoporosis. However, when administered on a continuous
basis, it can cause skin irritations and result in side effects in the
digestive tract. Roche's scientists
discovered that instead of daily dosings, a once-monthly dose of 150 mg could
also be effective without causing the adverse conditions. Based on this work, Roche owns two patents,
U.S. Patent Nos. 7,410,957 and 7,718,634, with method of treatment claims that
cover the FDA-approved use. In 2007,
Apotex, Watson Laboratories, Inc., and Mylan Inc. filed separate ANDAs to
engage in the commercial manufacture, use, or sale of generic versions of
once-monthly ibandronate products to treat osteoporosis. The present action was brought in the New
Jersey District Court, and during the pretrial proceedings, Roche filed the
present motion for preliminary injunction. The lower court denied this motion for the sole reason that Roche failed
to establish a reasonable likelihood that it would prevail against an
obviousness challenge from the Defendants in view of six prior art references. Roche appealed.

The
majority began its discussion by pointing out that the grant or denial of a
preliminary injunction is within the sound discretion of the lower court, and
that reversal is appropriate if one or more of the findings were clearly
erroneous, such that the lower court could be said to have abused its
discretion. To receive such a request, Roche
needed to establish that there was "a reasonable likelihood of success on
the merits," which in this case was a likelihood that Roche would
withstand an obviousness challenge in light of the burdens and presumptions
that inure at trial. In fact, the
majority pointed out that Roche did not challenge the framework employed by the
lower court. Instead, Roche challenged
the lower court's decision because it believed that the court applied an "obviousness
to try" standard, and that the court failed to consider evidence of
unexpected results.

The
majority disagreed with both of Roche's criticisms of the lower court's
analysis. First, the majority pointed
out that the District Court carefully evaluated each of the six references and
the testimony of Roche's own expert. The
lower court determined that the prior art evidenced a trend towards
intermittent (such as once-monthly) dosing of ibandronate based on the total
amount of ibandronate dosed in the same period under continuous (for example,
once-daily) administration. In fact, Roche's
expert conceded: (1) that one of the references provided a motivation to investigate
monthly dosing of ibandronate, (2) that in the 2000-02 timeframe, the art was
trending towards longer interval dosing, (3) that by the critical date, a
skilled artisan would have had reason to investigate once-monthly treatment,
(4) that determining a dose within a given broad range is a relatively routine
matter, and (5) that by May 2002, one of skill in the art would have had a
reasonable expectation that a once-monthly dose of ibandronate would have had
some effectiveness. With regard to the
objective evidence of non-obviousness, the lower court had found that Roche
failed to detail its position, much less substantively point out the
evidence. Instead, Roche apparently "incorporated
by reference" its summary judgment pleading, which itself apparently only
contained a few conclusory sentences with citation to the record. As a result, the lower court apparently did
not consider this information. In siding
with the District Court on this issue, the majority cited to the 7th
Circuit Court of Appeals in noting that district court judges "are not
archaeologists," and that it is not a district court's burden to "excavate
masses of papers in search of revealing tidbits."

Finally,
in response to the dissent's criticisms, the majority found that it owed
deference to the lower court. Ultimately,
the majority found no evidence of any clearly erroneous findings, much less any
abuse of discretion on behalf of the lower court in denying the request for the
preliminary injunction. Of note, during
this appeal, the District Court concluded in May on a motion for summary
judgment that the claims of one of the patents would have been obvious in view
of the same art (plus three additional references), and made a similar finding
with regard to the claims of the second patent earlier this month. Of course, even though it is interesting that
Roche was ultimately unsuccessful in fending off the obviousness challenge at
the lower court, those judgments are still subject to appeal, and appropriately
played no role in the majority's decision.

Judge
Newman in dissent complained that the equities in this case were not properly
weighed, because if they had been, the result would have been the preservation
of the status quo -- in other words, the ANDA filers would not have been allowed
to market their products regardless of the expiration of the 30-month
stay. Judge Newman pointed out the "panoply
of biological and clinical evaluations" needed to bring an effective and
safe drug to market, and the "millions of dollars" consumed to obtain
regulatory approval. She noted that
bringing a drug to market required a "heavy risk-laden investment," one
which the defendants were now trying to enjoy with no cost or risk of
failure. The problem with this analysis
is that this criticism applies in every ANDA case, and therefore following this
logic, an NDA holder would always get a preliminary injunction to maintain its
exclusive rights until at least the conclusion of litigation. Whereas there is some appeal to this position,
because it takes into account the substantial costs and risks of brining a drug
to market, the Hatch Waxman statute clearly contemplates the ability of an ANDA
filer to get approval at the end of the 30-month stay, and to "launch at
risk" should the litigation still be ongoing at the time. In other words, Congress contemplated that
not all preliminary injunctions would be granted, so the mere fact that a
generic manufacturer files an ANDA should not be the sole determining factor
whether an injunction should issue.

Judge
Newman also criticized the lower court's refusal to consider Roche's evidence
of unpredictable results. She pointed
out that, apparently, both parties had cited to their respective summary
judgment briefs in their filings for the present action. Nevertheless, Roche had the burden of
establishing that it deserved a preliminary injunction, so if the parties were
at fault for this practice, it should disproportionally affect Roche. Judge Newman also stressed the clear and
convincing standard required to invalidate an issued patent, and that this
burden was even greater in this case because the cited references were
considered by the examiner and rejected.
Therefore, in the end, Judge Newman believed that because of the
equities in this case and the presumption of validity of the patents, "the
fair and just action [would have been] to preserve the status quo during the
litigation."

July 11, 2012

On Monday, the Southern District of Florida denied Valeant International (Barbados) SRL's motion for a permanent injunction to prevent Watson Pharmaceuticals, Inc. from commercially manufacturing or selling its generic version of Aplenzin® (seeOrder Denying Motion for Injunctive Relief). Valeant had been successful in the District Court in fending off Watson's validity challenges of four Orange Book-listed patents related to bupropion hydrobromide, the active ingredient of Aplenzin®, after Watson had filed its ANDA and conceded infringement in the subsequently filed 35 U.S.C. § 271(e)(2) action. After final judgment was entered, Valeant filed a motion to amend the judgment to, among other things, enjoin Watson from any commercial activity before the expiration of the patents. The Court found that Valeant had not met the standard for injunctive relief because it didn't establish irreparable harm, and injunctive relief would be unnecessary (because the entered judgment prohibits Watson from marketing its generic version prior to the expiration of the patents).

To understand Valeant's motion, it is important to note that in addition to allowing a court to delay the approval of a generic drug until the date of expiration of any infringed patent, the Hatch-Waxman statute also provides that injunctive relief may be granted. See 35 U.S.C. § 271(e)(4)(B). The Court's order in this case does not explain why Valeant was seeking a permanent injunction, but it did point out that violation of an injunction can result in contempt proceedings against the infringer. The standard for injunctive relief in a patent case was established by the Supreme Court in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006):

A plaintiff must demonstrate: (1) that it has suffered irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Id. at 391. Valeant argued that all Hatch-Waxman cases involve direct competition that attempt to take market share from the NDA holder, which always results in irreparable harm. However, the Court noted that the Federal Circuit has repeatedly required that such evidence to be presented before an injunction can issue, including pharmaceutical cases, citing Abbott v. Labs. v. Andrx Pharms., Inc., 452 F.3d 1331 (Fed. Cir. 2006). The Abbott case did indicate that generic competition "alone does not establish that [the patent holder's] harm will be irreparable, id. at 1348, but Abbott was seeking a preliminary injunction and was more importantly unable to show a likelihood of success on the merits sufficient to meet that prong of the analysis. Nevertheless, the important point that the District Court took from the Abbott case was that the insufficiency of monetary damages needs to be established. It is not clear whether Valeant presented any such evidence.

Moreover, the Court pointed out that even if there was evidence of irreparable harm, Valeant still did not meet the standard for injunctive relief, because the entered judgment prevents Watson from marketing its generic bupropion hydrobromide before the expiration of the patents at issue, and thus Watson is prevented from competing directly with Valeant. This is true, however, in every 271(e)(2) action, and yet Congress provided for injunctive relief. It is possible that the District Court could have been persuaded by the procedural posture of this case, and that if Valeant were not seeking an amendment to the final judgment, the outcome may have been different. Or the Court could have been making clear that, after eBay, if you want injunctive relief, you better provide evidence to support it. Finally, the Court did note that if Watson violated the final judgment, another case could be filed in the Southern District of Florida (which presumably would satisfy any concern over the inability to seek sanctions).

Importantly, the Court relied on the Delaware case of Alcon, Inc. v. TEVA Pharms. USA, Inc. (D. Del. Aug. 5 2010) in reaching its decision. In that case, the court also denied Alcon's request for a permanent injunction because, in part, it failed to prove that it had suffered irreparable harm. Alcon had argued that any deprivation of its right to exclude other constitutes irreparable harm. However, similar to the present case, the Delaware court found that because Teva would be unable to market its generic product before the expiration of the product, it was necessarily prevented from "usurping any market share or goodwill from Alcon."

July 03, 2012

On Monday, in Sciele Pharma Inc. v. Lupin Ltd., the Federal Circuit vacated a preliminary injunction against ANDA-filer Lupin that blocked its sale of generic Fortamet, and remanded the case to the District Court for the District of Delaware for further processing. In so doing, the Federal Circuit reiterated the holding of the Supreme Court in Microsoft v. i4ithat, because issued patents enjoy a presumption of validity, the burden of proof for a challenger is clear and convincing evidence. The fact that a reference was before the Patent Office goes to the weight of the evidence, but the burden of proof never changes. As such, the Court explained, it may be harder to meet the clear and convincing burden when asserting invalidity contentions based on the same references and arguments considered by the Office. Nevertheless, the Federal Circuit found that Lupin had met the incredibly high burden of establishing that the District Court abused its discretion in issuing the injunction because it found that Lupin had raised a substantial question of invalidity -- even though it was a question of obviousness based on two references considered by the Office.

The technology at issue in this case was an extended-release tablet of metaformin hydrochloride, marketed as Fortamet, which is an oral antihyperglycemic drug used in the management of type 2 diabetes. According to the lower court's decision, the advantage of the extended-release formulation is that the maximum concentration of the drug occurs at night when the body's glucose level is the highest. The sole patent at issue was U.S. Patent No. 6,866,866 (the "'866 patent"), which claimed dosage forms of controlled release metformin compositions with a mean time to maximum plasma concentration at 5.5 to 7.0-7.5 hours after oral administration. However, as politely noted by the Federal Circuit, there was a "quirk" in the prosecution history of this patent. The examiner had rejected some of the pending claims as obvious in light of WO 99/47125 ("Cheng") in view of U.S. Patent No. 3,845,770. The examiner indicated that Cheng suggested a Tmax of 8 hours, and therefore rejected the claims which recited a Tmax range of 5.5-7.5 hours (because it was too close to the 8 hours of Cheng). In response, the applicant cancelled claim 1, which recited this range, but maintained a claim reciting the narrower range of 5.5-7.0 hours, amending it from dependent to independent form. Nevertheless, the Examiner issued a notice of allowance for the original claims. The applicant attempted to rectify this mistake by alerting the examiner to the error, which resulted in a supplemental notice of allowance to the amended claims without the cancelled claims (such a claim 1). But, the '866 patent issued with a "surprise" -- all of the original claims were printed in the patent, including canceled claim 1 with a Tmax range of 5.5-7.5 hours, and original claim 3 with a Tmax range of 5.5-7 hours.

The present action began when Lupin filed an ANDA to market generic Fortamet. Curiously, Sciele Pharma (now Shionogi Pharma) asserted both claims 1 and 3 (among others) -- even though the patentees had twice cancelled claim 1. The litigation remained unresolved at the end of the 30-month stay, so the FDA approved Lupin's ANDA on June 29, 2011, and Lupin launched its ANDA product "at risk" on September 30, 2011. Shionogi moved for a preliminary injunction, which the District Court granted on December 6, 2011, noting that the presumption of validity creates a very steep requirement for the Lupin's validity challenge. The Federal Circuit vacated this injunction on February 6, 2012 because of the lower court's failure to address the merits of the obviousness argument. Eight days later, the District Court issued its Findings of Fact and Conclusions of Law.

Without repeating the other factors required for issuing a preliminary injunction, the lower court focused exclusively on Lupin's obviousness challenge, undertaking the approach as elucidated by the Supreme Court in Graham v. John Deere Co. The Court first determined the scope and content of the cited prior art and ascertained the differences between it and the claims at issue. The District Court did note that Lupin relied heavily on the Supreme Court's KSR decision, but pointed out "a fundamental factual difference" in the present case -- the Patent Office had already considered Cheng and WO 99/47128 ("Timmins"), the two prior art references. As noted above, Cheng taught a formulation with a Tmax of 8 hours. Timmins, on the other hand, taught a new dosage form, but described a median Tmax, not at mean Tmax. And, an expert for Sciele declared that there was no way to ascertain the mean Tmax given only the median and the range. Moreover, Timmins allegedly indicated that its new formulation provided no impact on bioavailability. To the contrary, the Court noted, the '866 patent explains that the bioavailability is improved with the claimed formulation. With regard to the level of skill in the art, Lupin pointed to statements made by the applicant in response to an enablement rejection during the prosecution history. However, as the lower court noted, enablement and obviousness have different standards, and statements with regard to one are not necessarily applicable to the other. Finally, the Court did not consider any objective evidence of nonobviousness because the only evidence presented was after the filing date of the '866 patent. Based on this analysis, the lower court again issued a preliminary injunction, and Lupin appealed.

The Federal Circuit first acknowledged that it was required to review a decision to grant a preliminary injunction for an abuse of discretion, which must be either from a clear error of judgment in weighing relevant factors or an exercise of discretion based on an error of law. The Federal Circuit next rejected Lupin's argument that the claims of the '866 patent were not entitled to the presumption of validity because Sciele was asserting claims that it acknowledged should not have been issued. However, the Court similarly rejected Sciele's assertion that the claims were entitled to a heightened standard because the references were considered by the examiner. Again, the Court pointed out that the burden of proof requires clear and convincing evidence, regardless of what happened during prosecution. Instead, what happens during prosecution can go to the weight of the evidence.

Nevertheless, the Federal Circuit did find that that Lupin had raised a substantial question of validity. The Court apparently found that the District Court's obviousness determination was flawed because it had misapplied KSR, most likely because it had relied too heavily on the fact that the two references were before the Office during prosecution. However, even though the lower court did note this "fundamental factual difference," and it did indicate that deference was owed to the Office, it still undertook the proper Graham analysis. Instead, the Federal Circuit reached a different conclusion regarding the teachings of Cheng and Timmins -- finding that the Timmins-disclosed median Tmax range could be converted to the claimed mean Tmax range. The Court also found that the applicant's statements regarding enablement were evidence that the design choice to make the claimed extended release dosage would have been routine and obvious. In addition, the Federal Circuit noted that the benefits of an earlier extended release as touted by Timmons would have motivated one skilled in the art to modify Cheng to achieve a lower Tmax range. The Federal Circuit concluded that Sciele failed to effectively rebut Lupin's arguments regarding what Timmins teaches, and how it could be used as motivation to modify Cheng.

Even though the Federal Circuit conducted what appeared to be a persuasive obviousness analysis, it is not clear that the analysis conducted at the District Court was so erroneous as to justify vacating the preliminary injunction. After all, Lupin faced an incredibly high hurdle -- it needed to convince the Federal Circuit that the District Court abused its discretion in granting a preliminary injunction based, in part, on Lupin's failure to establish a substantial question of validity of an issued patent by clear and convincing evidence, in which both cited references were considered by the Office (which goes to the weight of the evidence). Instead, other than a few off-hand comments, the Court did not make much of the discrepancies between the issued claims and those that appear in the printed patent (and were asserted by Sciele). Nevertheless, Sciele's attorney was taken to task during the oral argument for its decision to assert claim 1 -- even though it had acknowledged that this claim was cancelled during prosecution. It is tempting, therefore, to think that the Federal Circuit reached the decision that it did to correct this inequity. The problem, though, is that Sciele also asserted claim 3 against Lupin -- a claim which always had the narrower Tmax range of 5.5-7 hours. Nevertheless, even though the Federal Circuit's opinion provides a very plausible reason why Lupin might ultimately be successful in its obviousness allegation, such a substitution of judgment should not be appropriate under the abuse-of-discretion standard required to vacate a preliminary injunction. As a result, it is difficult not to question whether the Court was just looking for a justification to correct this perceived inequity.

January 25, 2012

In a sequel of sorts to the hugely popular Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2011), the Federal Circuit released Streck II (Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)) earlier this month. Not to be upstaged by the original, this ambitious follow-up leaves the priority determination behind, and instead focuses on the infringement proceeding appeal. Notably, Streck II clocks in at over twice the length of its predecessor. However, if you have ever asked yourself whether a counterclaimant could maintain the full scope of a declaratory judgment challenge if a plaintiff narrows the scope of asserted claims early on in litigation, then Streck II could keep you on the edge of your seat. Spoiler alert -- the answer is "no."

The background and cast of characters was basically the same for both opinions. For those unfamiliar with the original Streck, the technology at issue in both cases was integrated controls for hematology analyzers. Prior to 1996, such instruments measured reticulocytes and white blood cells separately, because the various blood components would interfere with each other, causing error in counting or classifying. Such stand-alone controls using either true reticulocytes (also referred to as natural reticulocytes) or reticulocytes analogs were known before the filing dates of the patents-at-issue. As the instrument makers began attempting to develop an integrated analyzer that could measure the different blood components in the same sample, both Streck and Research & Diagnostic Systems (R&D) sought to create an integrated control. As we learned in Streck, one of the difficulties to overcome was the stability of the controls over extended periods of time. Streck obtained a patent to such controls, U.S. Patent No. 6,221,668, and sued R&D in the U.S. District Court for the District of Nebraska for infringement of three patents. Claim 1 of the '668 patent is representative:

The District Court construed the claims to encompass both true reticulocytes and reticulocyte analogs. Streck's inventor, however, only actually reduced his invention to practice with his previous developed reticulocyte analogs, while R&D's commercial product used true reticulocytes.

At this point, the plot of Streck II gets a bit convoluted. As previously mentioned, Streck filed its lawsuit in Nebraska. However, both parties agreed to be bound by the local patent rules of the United States District Court for the Northern District of California. As a result, Streck served a Disclosure of Asserted Claims and Preliminary Infringement Contentions shortly after the initial case management conference. In this disclosure, Streck narrowed the scope of asserted claims. R&D followed up with preliminary invalidity contentions narrowly drawn to the asserted claims, but later expanded the contentions to include all but one of the claims in the patents-at-issue. Streck further narrowed its asserted claims to ten, and then to nine, prior to the Court's Summary Judgment decision. On September 9, 2009, the Court held that Streck's patents satisfied the Written Description requirement with respect to integrated controls with true reticulocytes, and denied R&D's motion for summary judgment on enablement. The Court also dismissed the counterclaims with respect to Claim 3 of two of the patents, because there was "no reasonable apprehension of suit," and found that, as a matter of law, R&D infringed the asserted claims (and that there was evidence from which a jury could find willfulness). Subsequently, just before trial, the Court sided with Streck and excluded the evidence related to the validity of all unasserted claims, stating that the validity of these claims would not go to the jury. After an eight-day jury trial, the Court granted JMOL for Streck on enablement. The only issues submitted to the jury were priority, damages, and willfulness. The jury did not find R&D's infringement to be willful and awarded damages of 12.5%. As the priority issue was covered in Streck, it will not be addressed here. The procedural background concluded with the District Court entering an injunction against R&D.

Declaratory Judgment Jurisdiction over Counterclaims

The first issue on appeal was whether R&D could maintain invalidity counterclaims against claims that Streck was no longer asserting. Steck originally filed suit in June 2006 alleging infringement of all claims in the patents-in-suit, but within six months, it had narrowed the asserted claims to fifteen specific claims. R&D, in turn, responded with preliminary invalidity contentions against those fifteen claims, but expanded the scope of its invalidity contentions in the next two years to all but one claim of the patents-in-suit. Streck subsequently narrowed the asserted claims to ten, and then to nine. As a result, the District Court dismissed R&D's invalidity counterclaims against two claims because it had "no reasonable apprehension" it would face an infringement suit on any claim other than the claims asserted by Streck. Moreover, prior to trial, the Court excluded R&D's evidence with regard to the unasserted claims, because of these same jurisdictional concerns.

The Federal Circuit agreed with the District Court that there was no jurisdiction, even though it used the outdated "reasonable apprehension" test. As the Federal Circuit pointed out, even though MedImmune rejected strict reliance on the "reasonable apprehension of suit" test, it did not do away with the relevance of this test. The Federal Circuit looked favorably on a New Jersey District Court case as persuasive authority, Hoffman-La Roche Inc. v. Mylan Inc., No. 2:09cv1692, 2009 U.S. Dist. LEXIS 114784, at *17-18 (D.N.J. Dec. 9, 2009). In that case, like here, the patentee narrowed the scope of the asserted claims when it served infringement contentions. That court noted that jurisdiction exists on a claim-by-claim basis at every stage of the litigation, and that even though the plaintiff's decision to change the scope of the suit did not automatically divest the court of jurisdiction, the counterclaimant must show why jurisdiction continues to exist. Applying the same reasoning, the Federal Circuit found that "there was no evidence that R&D met its burden of showing a continuing case or controversy with respect to the unasserted claims." In fact, the Court noted that R&D relied too heavily on the District Court's use of the "reasonable apprehension" test, and pointed out that MedImmune doesn't stand for the proposition that jurisdiction automatically exists whenever a competitor wants to mount a validity challenge.

Interestingly, the Federal Circuit cited favorably to Streck's narrowing of the scope of the claims at the outset of the litigation, prior to any dispositive rulings. In fact, it appears that neither party cited to the preliminary infringement and invalidity contentions, but instead the Court itself identified the early nature of the narrowing of scope of the litigation. This begs the question, therefore, of when is it advisable to narrow the scope of the claims in an infringement suit? Should it be done as soon as possible, thereby possibly foreclosing the ability to assert relevant claims before fact discovery is completed (or perhaps has even begun)? Or can a patentee wait until the eve of filing of Summary Judgment motions? Of course, after MedImmune, courts must look to "all the circumstances," and therefore the answer will be fact specific. Nevertheless, it would be advisable to monitor the claims one is asserting in an infringement suit during all stages of the litigation, especially if it is desirable to move some of those claims out of harm's way, or if the validity of those claims is in such question that taking them to the jury could have prejudicial affect.

Written Description

The second issue on appeal was whether Streck's patents satisfied the written description requirement of 35 U.S.C. § 112, ¶ 1. Specifically, R&D alleged that the patents failed to provide sufficient details to establish that Streck was in possession of a true reticulocyte integrated control. The test, according to Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc), is whether the disclosure "conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date." Id. at 1351. The Federal Circuit implicitly noted that there are generally two situations where written description can be found lacking: (1) when newly added claim language is not supported by the specification as filed, and (2) when patentees attempt to claim a broad genus without providing adequate support for enough species within that genus. The Court found that neither of these situations applied, because the patents-in-suit specifically referred to several types of true reticulocytes, i.e., several species, as possible embodiments of the claimed invention. And, even though it was more relevant to the enablement requirement, the Court did note that because analogs are designed to mimic true reticulocytes, and because stand-alone true reticulocytes were known in the art, it was not difficult to conclude that one skilled in the art would have recognized that the claimed integrated controls could be made with either true reticulocytes or analogs.

R&D did not appear to take its written description challenge very seriously. Indeed, the District Court noted that the R&D focused primarily on enablement, and the Federal Circuit argument centered almost exclusively on the enablement issue. Instead, R&D appeared to rely mainly on the testimony of a Streck inventor to establish a lack of written description. However, R&D apparently mischaracterized the testimony. The inventor did testified to the commercial practicalities of the use of true reticulocytes, but such evidence does not speak to the feasibility or viability of the use of true reticulocytes in a control. Instead, it merely reflects the inventor's personal preference. Also, R&D pointed to the inventor's difficulty in identifying support in the specification for true reticulocytes. However, he later clarified that the patent covers both kinds of reticulocytes, and cited to the language referenced above. Finally, R&D cited the lack of any reduction to practice by Streck of true reticulocytes. However, actual reduction to practice is not necessary because the filed specification constitutes a constructive reduction to practice. Therefore, such an allegation is without merit.

Enablement

R&D's lack of enablement assertions appeared to have more credibility, but they also ultimately fell short. In fact, the Federal Circuit held that the evidence clearly supported a finding of enablement, and therefore met the exacting standard of taking this fact-laden inquiry away from the jury. The District Court had granted JMOL after the close of evidence but before the case went to the jury, and the Federal Circuit affirmed that decision.

Much like with the written description challenge, R&D alleged that the patents-in-suit do not enable true reticulocyte integrated controls. Of course, to satisfy the enablement requirement, the specification must enable one skilled in the art how to make and use the claimed invention without undue experimentation. And, even though the specification need not disclose what is well known in the art, this rule is not a substitute for a basic enabling disclosure.

The question in this case appeared to center around what the novel aspects of the invention were. R&D relied on Automotive Technologies Int'l, Inc. v. BMW of North America, Inc., 501 F.3d 1274 (Fed. Cir. 2007), which held that a patent that disclosed mechanical side-impact crash sensors for automobile airbags did not, without more, enable the use of electronic side-impact crash sensors. In that case, the Court determined that the electronic sensors were novel, and distinctly different than mechanical sensors. Moreover, the knowledge of one of skill in the art could not supply the missing information, especially when that missing information constituted the novel aspect of the invention. In contrast, in the present case, the novel aspect of the invention was the integrated reticulocyte control, and the use of true reticulocyte in the invention is virtually indistinguishable from analogs. Moreover, even though the burden was on R&D to establish lack of enablement by clear and convincing evidence, R&D failed to submit sufficient evidence to submit the case to a jury. R&D relied heavily on its expert, but the expert provided conclusory assertions which do not give rise to a genuine issue of fact. In fact, R&D's expert admitted on cross-examination that he had never been involved in developing controls. Finally, R&D pointed to the testimony of the Streck inventors that the quantity of experimentation to make and use a true reticulocyte integrated control would be high. However, this testimony was referring to the difficulties of using such a control prior to the patent disclosure.

Overbreadth of Injunction

After a quick flashback to Streck, in which the Court dismissed R&D's appeal of priority and evidentiary ruling as controlled by the outcome of the first case, Streck II concluded rather anticlimactically. R&D argued that the permanent injunction entered by the District Court was over broad because it prohibited R&D "from otherwise infringing the asserted claims of [the Patents-in-Suit] until the expiration of the last to expire of the Patents-in-Suit." Specifically, R&D wanted the injunction limited to the adjudicated products, and products not more than colorably different therefrom. However, the Federal Circuit noted that the injunction as a whole did specifically refer to the products at issue in the case. Therefore, because the injunction already contained the limitation sought, the Federal Circuit affirmed the permanent injunction entered by the District Court.

In conclusion, even though it had its slow points, we would give Streck II two thumbs up, and would recommend it to most patent practitioners, especially those embroiled in litigation, trying to determine whether it is advantageous to narrow the scope of asserted claims.

January 10, 2012

The effects of the Supreme Court's decision in KSR Int'l Co. v. Teleflex Inc. continue to ripple unpredictably through the Federal Circuit's jurisprudence, promoting inconsistencies in obviousness determinations by the Court that seem contrary to its mandate to harmonize U.S. patent law. The most recent illustration of this effect is in Celsis In Vitro, Inc. v. Cellzdirect, Inc., where a divided panel affirmed the grant of a preliminary injunction over a dissent based, in part, on a rigid understanding of the implications of the KSR decision.

The suit by Celsis alleged infringement of U.S. Patent No. 7,604,929, specifically a method for providing cryopreserved human hepatocytes:

A method of producing a desired preparation of multi-cryopreserved hepatocytes, said hepatocytes, being capable of being frozen and thawed at least two times, and in which greater than 70% of the hepatocytes of said preparation are viable after the final thaw, said method comprising: (A) subjecting hepatocytes that have been frozen and thawed to density gradient fractionation to separate viable hepatocytes from non-viable hepatocytes, (B) recovering the separated viable hepatocytes, and (C) cryopreserving the recovered viable hepatocytes to thereby form said desired preparation of hepatocytes without requiring a density gradient step after thawing the hepatocytes for the second time, wherein the hepatocytes are not plated between the first and second cryopreservations, and wherein greater than 70% of the hepatocytes of said preparation are viable after the final thaw.

Thus, the claim recited three steps: subjecting frozen and thawed hepatocytes to a density gradient to separate viable from non-viable cells; recovering the viable cells, and freezing the cells again that have >70% viable cells after a second thaw without requiring density gradient step. Evidence before the District Court established that human hepatocytes are fragile and hard to cryopreserve, being very susceptible to damage when frozen and thawed and that there was an expectation in the art that repetition would make that worse, i.e., there would be even fewer viable cells after several freeze/thaw cycles. Human hepatocytes were in short supply and there was large demand, with available sources in the art being limited to fresh tissue that is rarely available. As a consequence, research was disrupted because it was dependent on sporadic availability of these cells. The opinion in the art was that hepatocytes could not be productively cryopreserved because too many non-viable cells were produced, the Court noting that "experts in this field met initial attempts to freeze hepatocytes with skepticism." The accused infringing article was a pooled multi-cryopreserved hepatocyte product allegedly produced using the claimed method (although the opinion does not give the details of the accused products "[f]or confidentiality reasons") sold in direct competition with the Celsis product (also a pooled multi-cryopreserved hepatocyte product). The District Court (Judge Milton Shadur of the Northern District of Illinois) granted the preliminary injunction.

The Federal Circuit affirmed, in an opinion by Chief Judge Rader joined by Judge Prost, with a dissent by Judge Gajarsa. The majority opinion recited the "four factors" considered with regard to a preliminary injunction: "(1) likelihood of success on the merits, (2) irreparable harm, (3) balance of hardships, and (4) public interest." Defendants challenged the District Court's decision on the first prong based on non-infringement and invalidity (for obviousness). Regarding infringement, there was a "battle of the experts" won by Celsis, perhaps in part because defendants put forward their marketing director as an expert. The Celsis expert provided testimony on the meaning of claim term "density gradient fractionation" and then "applied the term to the accused process." The District Court's decision regarding infringement was also based decision on construction of the term "not requiring" for performing a second density gradient fractionation as being inclusive of methods that actually perform a second density gradient fractionation (provided it is not "required"). The District Court expressly rejected defendants' construction that "not requiring" was equivalent to "prohibited," based on its interpretation that this construction incorporated a limitation from the specification into the claim (which the Court characterized as "hokum"). On this record, the Federal Circuit found no abuse of discretion by the District Court in deciding there was a likelihood that Celsis would succeed in its infringement claim.

The second issue was non-obviousness. Evidence from both parties included a "vast proliferation of authors and articles dealing with hepatocytes and use of cryopreservation." The District Court concluded that the claimed method was non-obvious because "not a single one of that astonishingly large body of literature was devoted to the subject of multi-cryopreservation of hepatocytes" (with the District Court noting stress on "multi"). The District Court rejected testimony from defendants' expert that one of his articles disclosed multi-cryopreservation of hepatocytes, finding that the reference was limited to fetal hepatocytes, which were not the same as adult hepatocytes. Also, since fetal cells were replication-competent, District Court credited testimony from the Celsis expert that it was not possible to determine "whether the same cells were cryopreserved more than once" (which was conceded by defendants' expert). This reference not the issue on appeal, however; there was another reference that taught whether single-cryopreserved hepatocytes could substitute for fresh hepatocytes (in humans, dogs and monkeys).

In reviewing the District Court's non-obviousness determination, the majority recited the Graham v. John Deere Co. analytical framework of factual inquiries regarding: "(1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness," citing Eli Lilly & Co. v. Teva Pharm. USA, Inc., 619 F.3d 1329, 1336 (Fed. Cir. 2010). On this record, the majority found no abuse of discretion, while noting that defendants would be able to "expand upon the arguments it made at the preliminary injunction stage" at trial. The majority "does not opine on the final determination, which lays in the realm of the district court in the first instance." The opinion emphasized the unpredictability in the art, affirming the District Court's finding that "the art was a crowded field for many years and yet there was not one reference to multi-cryopreservation" and "taught away from multiple freezings." In addition, the opinion noted that the expectation in the art was that a second freezing would result in "greater loss of cells after the second cryopreservation than after the first" and relied upon this understanding as grounds for deciding the art did not render obvious the claimed invention.

In a passage noted in the dissent, the majority specifically found that the second reference relied upon in the appeal did not provide "any teaching, suggestion, or motivation . . . that multiple rounds of freezing would somehow increase rather than decrease cell viability" and criticized defendants' argument as "vague reference[] to 'market need.'" Rather, the majority said that "without more" this was evidence of the objective criteria of "long felt need" and thus was "supportive of non-obviousness." And as part of its analysis, the majority found the District Court's decision to be based in art on a (negative) assessment of defendants' witnesses' credibility, something the reviewing court gives "wide discretion" to the district court, citing Conoco, Inc. v. Energy & Envtl. Int'l, L.C., 460 F.3d 1349, 1362-63 (Fed. Cir. 2006), Bristol- Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1236 (Fed. Cir. 2003), Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1231-32 (Fed. Cir. 2007), and Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366, 1379 (Fed. Cir. 2006). Rather, the opinion states:

Not one of LTC's experts testified to actually performing the claimed process or documenting their alleged understanding before the time of the invention, despite having the financial, scientific, and professional incentive to do so. The district court found that LTC's experts did not predict the results of the claimed methods at the time of the invention, nor could they find any reference in the prior art suggesting that any other scientist had.

The Federal Circuit also found no abuse of discretion by the District Court in determining that the other prongs of the test, irreparable harm, balance of the hardships and the public interest, were satisfied. "Irreparable harm" in this case included "price erosion, damage to ongoing customer relationships, loss of customer goodwill (e.g., when an effort is later made to restore the original price), and loss of business opportunities," all of which the majority found were "valid grounds for finding irreparable harm," citing Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1362 (Fed. Cir. 2008), and Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1382-83 (Fed. Cir. 2006). The Court based its agreement on the balance of the hardships on the fact that "[defendant's] losses were the result of its own calculated risk in selling a product with knowledge of Celsis' patent," citing Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006). The public interest "favors the enforcement of Celsis' patent rights" in this case because "investment in drug research and development must be encouraged and protected by the exclusionary rights conveyed in valid patents," and does not constitute an abuse of discretion because "[t]hat incentive would be adversely affected by taking market benefits away from the patentee and giving them to the accused infringer in this case."

Judge Gajarsa's dissent illustrates how the Supreme Court's KSR decision has a tendency to tip the balance between an objective assessment of the prior art as understood by one having ordinary skill in the art and its relevance to the claimed invention in favor of a court's subjective determination that an invention is obvious (the "I know it when I see it" standard). In addition, Judge Gajarsa evinces a belief that a preliminary injunction is "an 'extraordinary and drastic' remedy" that should be denied if a defendant can raise a (presumably unrebutted) "substantial question" on the patent's validity. Here, he writes that the District Court abused its discretion by committing legal error with regard to obviousness by holding defendants "to a clear and convincing standard of proof" and "reinvigorate[ing] the pre-KSR standard for obviousness, rigidly requiring an explicit teaching, suggestion, or motivation for multi- cryopreserving hepatocytes."

The basis for this opinion is that, in his view, the absence of "two limitations of the claimed invention" (freezing and thawing hepatocytes a second time and making the density gradient fractionation optional after the second thaw)" in the prior art did not defeat defendants' obviousness argument, because "obviousness does not require that each element of the claimed invention must be present in the prior art," citing Tegal Corp. v. Tokyo Electron Am., Inc., 257 F.3d 1331, 1349 (Fed. Cir. 2001). Indeed, in his view "all of the claimed elements were present in the prior art," including "(1) thawing cryopreserved hepatocytes; (2) using density gradient fractionation to separate viable and non-viable cells; and (3) refreezing and rethawing the hepatocytes." Taking each limitation individually (rather than considering the invention as a whole according to the plain language of the statute), the dissent notes that "[b]oth cryopreservation and density gradient fractionation were well known in the art at the time of the invention." In Judge Gajarsa's opinion, the remaining step recited in the claim was "nothing more than measuring the viability of cells thawed for a second time. If the cells have more than 70% viability, they meet this limitation; if they do not have 70% viability, they do not meet this limitation." Citing Great Atl. & Pac. Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 152-153 (1950), the dissent characterizes the invention as a "patent for a combination which only unites old elements with no change in their respective functions [and] obviously withdraws what already is known into the field of its monopoly." The invention in Judge Gajarsa's view of nothing more than "[r]epeating known steps to obtain a desired result" which is not inventive, citing Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1330-31 (Fed. Cir. 2009). The dissent also characterizes the majority's recognition that the art was unpredictable, and would have expected the claimed invention to be inoperative, as trying to "have it both ways," citing Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1364 (Fed. Cir. 2007), for the principle that "some degree of unpredictability" cannot render an invention non-obvious "so long as there was a reasonable expectation of success," despite the majority's reliance on evidence that there was no such reasonable expectation of success in this case.

The dissent also finds fault with the majority's citation of defendants' failure to provide evidence of any "teaching, suggestion or motivation" in the art as being contrary to the Supreme Court's KSR precedent, eliding the nuance that the Court corrected the Federal Circuit for rigid application of the test and, in fact, preserved the TSM test as being a useful analytical tool for deciding obviousness provided it was not rigidly applied.

The dissent illustrates the difficulties that arise from the Supreme Court's most quoted passage from KSR:

'When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp,' the invention is likely obvious.

The first portion of the sentence conflates the obviousness analysis from Graham v. John Deere with one of the objective indicia of non-obviousness; it is clear that grounds for finding an invention non-obviousness ("long-felt need in the art") cannot also be a basis for finding an invention obvious ("when there is a design need or market pressure to solve a problem"). Rather, it is only when the Supreme Court's statement is taken in its entirety that the two analytical frameworks can be reconciled: that in response to the need (long-felt or otherwise), and when there exists a "finite number of identified, predictable solutions" and (in a portion of the Supreme Court's teachings not recited in the dissent) "[i]f this leads to the anticipated success," then "it is likely the product not of innovation but of ordinary skill and common sense." It would appear that the required expectation of success was missing under the facts of this case.

The other basis for Judge Gajarsa's disagreement with the majority relates to the burden placed on defendant in avoiding the preliminary injunction. According to the dissenting opinion, defendants were required merely to provide evidence that the asserted claims were "vulnerable" and did not need to establish (by clear and convincing evidence) that the claims were invalid. This amounts to merely raising a "substantial question" regarding the claims' validity according to Judge Gajarsa, citing Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001); Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997), and Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC, 431 Fed. Appx. 884, 886-7 (Fed. Cir. 2011). The District Court (and the majority) improperly shifted the burden to defendants, according to the dissent, and should have "simply decide[d] whether it is more likely than not that the patent will be proven invalid at trial," citing Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1379-80 (Fed. Cir. 2009).

Once again, these diverging standards for deciding questions of obviousness create a certain nostalgia for the wisdom of Judge Learned Hand in considering obviousnses:

The test laid down [in 35 U.S.C. § 103] is indeed misty enough. It directs us to surmise what was the range of ingenuity of a person "having ordinary skill" in an "art" with which we are totally unfamiliar; and we do not see how such a standard can be applied at all except by recourse to the earlier work in the art, and to the general history of the means available at the time. To judge on our own that this or that new assemblage of old factors was, or was not, "obvious" is to substitute our ignorance for the acquaintance with the subject of those who were familiar with it. Reiner v. I. Leon Co., 285 F.2d 501 (2d Cir. 1960)

Courts, made up of laymen as they must be, are likely either to underrate, or to overrate, the difficulties in making new and profitable discoveries in fields with which they cannot be familiar; and so far as it is available, they had best appraise the originality involved by the circumstance which preceded, attended and succeeded the appearance of the invention. Safety Car Heat & Light Co. v. General Electric Co., 155 F.2d 937 (2d Cir. 1946).

December 12, 2011

The Federal Circuit reversed the grant of a preliminary injunction in Warner Chilcott Labs. Ireland Ltd. v. Mylan Pharmaceuticals Inc., an ANDA case brought before Judge Martini in the New Jersey District Court. While not extending or changing the law on the requirements for a preliminary injunction grant, the decision illuminates the considerations the Court finds important in deciding whether a district court has abused its discretion.

The case involved the antibiotic doxycycline hyclate, sold in 75-, 100-, and 150 mg tablets by Warner Chilcott as Doryx® under a license from the NDA holder, Mayne Pharma International Pty. Mayne also owns Orange Book listed U.S. Patent No. 6,958,161, which is related to a modified release coated form of doxycycline. Suit was initiated subject to the Hatch-Waxman statutory scheme when defendant Mylan filed an ANDA for the 150 mg tableted version of the drug containing a Paragraph IV certification that the listed patent was invalid, unenforceable, and not infringed. Filing the lawsuit triggered the automatic 30-month stay of FDA approval of the generic drug, and Warner Chilcott moved the District Court for a preliminary injunction shortly before the period of the stay would have expired (when Mylan anticipated the FDA would grant its approval).

As part of the litigation below, the District Court construed the asserted claims in a Markman hearing. While claim construction was not directly at issue in the appeal, it was relevant to the first prong of the preliminary injunction test: whether Warner Chilcott had shown a reasonable likelihood of success on the merits. The District Court considered expert witness reports from both Warner Chilcott and Mylan regarding whether Mylan's product satisfied the recited limitations of the claims. (The Federal Circuit characterized this as "a battle of the experts.") The outcome of the "battle" was hardly definitive, the District Court saying that there were "some serious factual disputes" between the parties' experts that would need to be resolved after "further testimony and examination and credibility" at trial. The District Court denied Mylan's request for an evidentiary hearing and, despite its reservations about the differences between the experts, granted a preliminary injunction to Warner Chilcott, finding that it had fulfilled the requirements of (1) a likelihood of success on the merits; (2) irreparable harm; and (3) a balancing of the hardships in favor of the plaintiff. Neither the parties nor the Court appear to have considered the fourth prong, the public interest. "Notably," the opinion states, "the district court did not address Mylan's arguments that the '161 Patent is invalid because of anticipation or obviousness."

There is one additional factor at play in the case. The District Court informed the parties that it would not be able to conduct a trial on the merits until January 2012 due to a lengthy murder trial scheduled for autumn 2011.

The Federal Circuit reversed, in an opinion by Judge O'Malley joined by Chief Judge Rader and Judge Dyk. The Court applied the law of the regional (Third) Circuit for whether the preliminary injunction was granted as the result of "an abuse of discretion, an error of law or a clear mistake in the consideration of proof." Factual findings were reviewed for clear error. Here, the panel found clear abuse of discretion, based on the District Court's failure to hold an evidentiary hearing, which the Federal Circuit found was an absolute requirement in the Third Circuit for grant of a preliminary injunction. The opinion states that the District Court granted the injunction on "an unsettled record" in full appreciation that there was a factual dispute between the parties' experts that it did not resolve prior to the injunction grant. While the Federal Circuit "recognize[d] and [was] not unsympathetic to the district court's scheduling demands and the difficulty in balancing a busy criminal docket with pressing civil matters," the opinion reversed because the District Court's decision to grant the injunction was "contrary to Third Circuit law."

Finally, the opinion asserted as another ground for reversing the preliminary injunction that the District Court "failed to make any findings as to Mylan's invalidity challenge" and as a consequence the Federal Circuit was prevented "from engaging in any meaningful review of that issue." Under Federal Rule of Civil Procedure 52(a)(1), a district court must "find the facts specially and state its conclusions of law separately" and here the District Court failed to comply with the Rule. Supreme Court (Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 316 (1940)) and Third Circuit (Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004)) precedent (as well as Federal Circuit law, for example, Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1378-79 (Fed. Cir. 2009)) mandated compliance with Rule 52. The District Court's "utter failure" to comply with Rule 52 with regard to Mylan's invalidity allegations provided yet another basis for overturning the District Court's injunction. Nevertheless, the opinion vacated and remanded with instructions that the District Court could consider entering a temporary restraining order and consolidating the evidentiary hearing for the injunction with a (bench) trial on the merits. The opinion also "[took] no issue with the adequacy of the trial court's findings on irreparable harm and the balance of the hardships" and mandated no reconsideration of these prongs of the test "unless [the District Court] chooses to do so."

While not breaking new ground on preliminary injunction jurisprudence, the case does present an interesting issue, particularly in view of the Supreme Court's penchant over the last decade to chastise the Federal Circuit for adopting patent-specific rules for matters like injunctions. The High Court has made it very clear (in cases such as eBay Inc. v. MercExchange, L.L.C.) that the Federal Circuit is bound by and must apply the same rubrics for making decisions about injunctions and other procedural matters as are applied in the other several circuit courts. And as the Federal Circuit has done here, the Court must apply the law of the regional circuit in which the district court sits.

This raises the question of whether it might be better for appeals such as this one, which depends more on the application of procedural rules and precedent developed in said regional circuits (rather than Federal Circuit-specific case law) to be decided by the regional circuit courts of appeal. The question presented for review in this case is illustrative: the Federal Circuit did not apply any patent-specific rules or precedent to the matter; indeed, the cases cited were (by and large) Third Circuit cases. For both procedural consistency and as a way to reduce the workload on the Federal Circuit it might make sense for these cases not to go to that Court. The particular regional circuit court could always (on party motion or sua sponte) transfer the appeal to the Federal Circuit if the issues appeared to be controlled by questions of patent law. But for many cases, judicial efficiency might be better served to render unto the Federal Circuit those things limited to patent law, and to leave for the regional circuits those issues that are not so limited.

December 26, 2010

Last week, in Sanofi-Aventis v. Sandoz, Inc., the Federal Circuit vacated the entry of a consent judgment and an injunction by the District Court for the District of New Jersey, which enjoined Defendants-Appellants Sun Pharmaceutical Industries, Ltd. and Caraco Pharmaceutical Laboratories, Ltd. ("Sun") from manufacturing and selling a generic version of the colorectal cancer drug oxaliplatin. The appeal arose from a dispute between Sun and Plaintiffs-Appellees Sanofi-Aventis, Sanofi-Aventis U.S. LLC, and Debiopharm, S.A. ("Sanofi") following Sun's filing of an Abbreviated New Drug Application (ANDA) for generic oxaliplatin and Sanofi's filing of suit against Sun in response to Sun's ANDA filing. Sanofi also filed suit against other generic drug manufacturers who filed ANDAs for generic oxaliplatin.

After Sanofi filed suit against Sun, the parties entered into settlement negotiations, eventually agreeing to a license that contained the following provision (i.e., Section 3.5, with emphasis added by the Federal Circuit):

At-Risk-Launch. In the event that, during the term of the Licensed Patents and without Sanofi's permission, any defendant in the Consolidated Eloxatin Patent Litigation sells a generic version of a Sanofi NDA Product in the Territory prior to a Final Court Decision ("At-Risk-Launch"), [Sun] will have the option of selling its Generic Equivalent prior to the Launch Date. Should Sun exercise such an option and a Court subsequently enters a decision(s) enjoining each such At-Risk Launch product(s), Sun agrees that Sun will not sell its Generic Equivalent from the time the Court enters an injunction(s) against each such At-Risk Launch Product(s) until the Launch Date.

The license agreement was submitted by the parties to the District Court with a proposed consent judgment and order. Pursuant to the consent judgment and order, which incorporated Section 3.5 of the license agreement, Sun could market its version of generic oxaliplatin if other generic drug manufacturers were marketing their generic version of the drug, but if a "Court subsequently enter[ed] a decision(s) enjoining" other generic manufacturers from marketing a generic version of oxaliplatin, Sun would also be enjoined.

Two days after Sanofi and Sun reached the settlement agreement, the District Court denied summary judgment of invalidity and granted summary judgment of noninfringement of Sanofi's U.S. Patent No. 5,338,874. A series of challenges to the original license agreement followed.

While the parties attempted to resolve the enforceability of the original agreement, the other generic drug manufacturers launched at-risk versions of generic oxaliplatin. Sanofi responded by negotiating settlement agreements with the other defendants that included a proposed consent order with a provision requiring that Sun be enjoined from marketing a generic equivalent of oxaliplatin by a certain date, and allowing the other defendants to reenter the market if Sun was not enjoined. Sanofi then sought entry by the District Court of a revised version of the original consent judgment, with the revised version containing a provision stating that "[u]nder the License Agreement, if an injunction [was] entered preventing the other defendants from selling their Eloxatin product at risk, then Sun [was] obligated to stop selling its generic Eloxatin product at risk." In response, Sun argued that the revised consent judgment was not the same as the original and that Sun had not agreed to the revised version. Notwithstanding Sun's objections, the District Court entered the consent judgment and order proposed by Sanofi.

On appeal, Sun argued that the District Court had erred by entering a consent judgment to which it did not agree. Sanofi countered that the revised consent judgment was correctly entered because it was consistent with the license agreement. The dispute centered on the meaning of Section 3.5 of the license agreement. Sanofi contended that under Section 3.5, Sun was required to cease sales of generic oxaliplatin after entry of an injunction against the other defendants -- even if the injunction is the result of a consent judgment agreed to by any of the other defendants. Thus, the term "decision(s) enjoining" in Section 3.5 is synonymous with "orders enjoining" or "judgments enjoining." Sun, however, argued that it had a right to continue selling generic oxaliplatin, even if other defendants settle and consent to an injunction, because an injunction entered by consent is not the result of a court decision.

Looking at the disputed section, the Federal Circuit determined that "[t]he language 'decision(s) enjoining' in Section 3.5 is ambiguous as to whether a 'decision' includes a consent judgment and injunction resulting from a settlement between parties or whether it requires an injunction issued by a court following a decision on the merits." The panel noted that while Sanofi argued that the language of the section clearly includes consent judgments, "Sanofi now represents to this court that the license agreement is clear and unambiguous, despite its earlier need to 'clarif[y] Sun’s obligations [via the revised consent judgment],'" adding that "Sanofi's own recognition that the agreement required clarification is itself powerful evidence of ambiguity." As a result of this ambiguity, the panel found that the District Court had erred by not affording Sun "a full and fair hearing as to material disputed language of the agreement." The panel noted that "[m]aterial terms of a consent judgment that are objectively ambiguous and clearly contested prior to entry of the consent judgment require a determination by the court as to the parties' obligations under those terms before entry of that revised consent judgment." The Federal Circuit therefore vacated the consent judgment and remanded the case with instructions to provide the parties an opportunity to conduct discovery and present their evidence as to the proper resolution of the ambiguous language in the license agreement that is incorporated into the parties' original proposed consent judgment.

September 01, 2010

The U.S. Court of Appeals for the Federal Circuit issued an Order today in Eli Lilly & Co. v. Actavis Elizabeth LLC, granting Lilly's request for an injunction to prevent Defendants-Appellees from launching generic versions of Lilly's ADHD drug Strattera® until Lilly's appeal has been resolved. On August 25, Lilly filed a notice of appeal seeking review of a decision by the District Court for the District of New Jersey invalidating Lilly's U.S. Patent No. 5,658,590 for lack of enablement, and then immediately moved for an injunction pending disposition of its appeal. Defendants-Appellees opposed Lilly's request for an injunction in a response that was due Monday. In granting Lilly's motion, the Court stated that Lilly had met its burden to obtain an injunction pending appeal.

In addition, two of the Appellees (Aurobindo Phrama and Mylan Pharmaceuticals) moved for clarification of the Court's August 26 Order continuing a 14-day injunction granted by the District Court one week earlier. The Federal Circuit's August 26 Order also set an expedited briefing schedule in which Lilly's opening brief is due by Thursday, September 9; Defendants-Appelllees' briefs are due by Thursday, September 23; and Lilly's reply brief and the joint appendix are due by Thursday, September 30. It is the expedited briefing schedule for which Aurobindo and Mylan sought clarification. In particular, Aurobindo and Mylan asserted that in view of cross-appeals that had been filed, the briefing schedule required revision. The Court, however, dismissed the cross-appeals for lack of jurisdiction and denied the motion for clarification.

December 22, 2009

The latest
challenge to Amgen's erythropoietin (EPO) franchise ended today, when
Hoffman-La Roche agreed to keep its pegylated derivative of human EPO, Mircera®,
off the market until July 1, 2014.The U.S. Food and Drug Administration granted approvalfor Roche to market Mircera® in November,
2007 (it has already been approved in Europe and is sold in Austria, Sweden,
Germany, the United Kingdom, and Norway) but the company has been under an
injunction issued by Federal District Court Judge William G. Young pursuant to
a judgment of infringement against Roche at trial (see "Victory for Amgen in District Court Decision" - Part I, Part II, Part III). While the terms
of the settlement are not public, according to Amgen there will be no payments
from either company.

The parties stipulated to final judgment and a permanent injunction against Roche in a paper
filed jointly with the District Court on Monday. In the stipulation, Roche agreed
that the following claims of the patents-in-suit are "valid, enforceable
and infringed by Roche's Mircera® product":

Roche also
agreed to dismissal with prejudice of its "claims, defenses and counterclaims."The stipulation was entered by the
court as an order, to which it appended the following:

Except as
allowed under any license agreement reached between the parties, Roche, its
agents, servants, employees, counsel, and all persons and entities acting in
concert therewith, are hereby permanently enjoined for the life of U.S. Patent
No. 5,441,868, U.S. Patent No. 5,547,933, U.S. Patent No. 5,618,698, U.S.
Patent No. 5,955,422 and U.S. Patent No. 5,756,349 from infringing said patents
by the manufacture, importation, sale, offer for sale or non-exempt use of
pegylated Epoetin beta (otherwise referred to as "MIRCERA" or "CERA")
in the United States.

Settlement
eliminates risks for both parties. Amgen sued Roche in a declaratory judgment
action in Massachusetts, asserting six patents: U.S. Patent Nos. 5,547,933; 5,441,868; 5,618,698; 5,955,422 (claim 1); 5,756,349 (claim 7); and 5,621,080 (the '080 patent) On October 23, 2007, a jury found that Mircera®
infringed the '933 patent, the '868 patent, and the '698 patent, and that these
patents, as well as the '422 patent and the '349 patent, were not invalid. (The jury reached neither infringement nor validity of the '080 patent). Specifically, the jury found that Roche's Mircera® infringed claims 3, 7, and 8
of the '933 patent (claim 12 was found not to be literally infringed but
infringed under the Doctrine of Equivalents); claims 1 and 2 of the '868
patent; and claims 6 through 9 of the '698 patent. On October 1, 2008,
Massachusetts District Court Judge William Young ruled (in Amgen's favor for
each) on several post-trial motions, including: 1) affirming the jury's
infringement decision by denying Roche's motion for judgment as a matter of law
(JMOL); 2) reaffirming its pretrial decision to grant summary judgment
regarding infringement of claim 1 of the '422 patent; 3) "explaining"
its reasoning for ruling, also pretrial, that the claims of Amgen's
patents-in-suit are not invalid for obviousness-type double patenting (despite
the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.);
4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims
3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting
the term "human erythropoietin"; and 5) granting Amgen a permanent
injunction barring "Roche, its agents, servants, employees, counsel, and
all persons and entities acting in concert therewith" from infringing the claims
of the patents-in-suit for the remaining life of those patents.

The Federal
Circuit affirmed most of the determinations by the District Court and the jury,
including that the asserted claims of the '868 patent (claims 1 and 2) and the '698
patent (claims 6-9) are not invalid and were infringed, that claims 3, 7,
and 8 of the '933 patent and claim 1 of the '422 patent were infringed, and that
claims 9, 11, 12, and 14 of the '933 patent are not infringed by Mircera®. However, the panel opinion vacated Judge Young's decision that the '933 (claims
3, 7, and 8), '349 (claim 7), and '422 (claim 1) patents are not invalid under
obviousness-type double patenting and remanded this issue to the trial court.The Federal Circuit also vacated the
judgment that claim 7 of the '349 patent was not infringed and remanded for a
new trial on that issue.This
decision put several of Amgen's patents at risk for invalidation under the
Federal Circuit's recent jurisprudence interpreting the scope of the "safe
harbor" of 35 U.S.C. § 121 (Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2008) and Takeda Pharmaceutical Co. v. Doll (Fed. Cir. 2009)). Invalidation of the '933, '349, and '422
patents would have reduced Amgen's patent protection on its various EPO
products (including Aranesp® and Epogen®) from May 2015 to August 2012 (more
than 3 years), which would have a significant (negative) effect on the
corporate bottom line. Thus, by settling, Amgen has avoided invalidation
of these three patents, and Roche has avoided any damages or attorneys' fees
Amgen may have pursued.Roche also
has obtained a date certain for entering the U.S. market with its pegylated EPO
product.

For additional information regarding this and other related topics, please see:

September 15, 2009

Amgen has several times successfully defended its
erythropoietin (EPO) franchise, the company's first commercial success and in
many ways the crown jewel of its (or anyone's) biologics drug pipeline.That string of successes continued
today with a decision by the Federal Circuit against its latest challenger,
Hoffman-La Roche.But the decision
also put several of the patents protecting Amgen's EPO at risk, making this a
mixed victory at best for the biotechnology company.

The case involved the most recent challenge, Roche's
Mircera® product, a pegylated derivative of human
EPO.Amgen sued Roche in a
declaratory judgment action in Massachusetts asserting six patents: U.S.
Patent Nos. 5,547,933
(the '933 patent), 5,441,868
(the '868 patent), and 5,618,698
(the '698 patent), U.S. Patent Nos. 5,955,422
(the '422 patent, claim 1) and 5,756,349
(the '349 patent, claim 7) and U.S. Patent No. 5,621,080
(the '080 patent).On October 23,
2007, a jury found that Mircera® infringed the '933
patent, the '868 patent and the '698 patent, and that these patents as well as
the '422 patent and the '349 patent were not invalid. (The jury reached neither
infringement nor validity of the '080 patent).Specifically, the jury found that Roche's Mircera® infringed
claims 3, 7, and 8 of the '933 patent (claim 12 was found not to be literally infringed but infringed under the
Doctrine of Equivalents); claims 1 and 2 of the '868 patent;
and claims 6 through 9 of the '698 patent. On October 1, 2008, Massachusetts District Court Judge William Young ruled (in
Amgen's favor for each) on several post-trial motions, including: 1)
affirming the jury's infringement decision by denying Roche's motion for
judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to
grant summary judgment regarding infringement of claim 1 of the '422 patent; 3)
"explaining" its reasoning for ruling, also pretrial, that the claims
of Amgen's patents-in-suit are not invalid for obviousness-type double patenting
(despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA,
Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422
patent and claims 3, 7, and 9 of the '933 patent are not invalid for
indefiniteness for reciting the term "human erythropoietin"; and 5)
granting Amgen a permanent injunction barring "Roche, its agents,
servants, employees, counsel, and all persons and entities acting in concert
therewith" from infringing the claims of the patents-in-suit for the
remaining life of those patents.

The Federal Circuit's decision, written by
Judge Schall and joined by Judges Mayer and Clevenger, affirmed most of the
determinations by the District Court and the jury.These will be discussed more extensively in future posts,
but can be summarized simply here:the panel vacated Judge Young's decision on whether the '933 (claims 3,
7, and 8), '349 (claim 7) and '422 (claim 1) patents are not invalid under
obviousness-type double patenting and remanded this issue to the trial
court;vacated the judgment that
claim 7 of the '349 patent was not infringed and remanded for a new trial on
that issue; affirmed the judgments that the asserted claims of the '868 patent
(claims 1 and 2) and the '698 patent (claims 6-9) are not invalid and were
infringed, and that claims 3, 7, and 8 of the '933 patent and claim 1 of the '422
patent were infringed; and finally that claims 9, 11, 12, and 14 of the '933
patent are not infringed by Mircera®.

Because of the number claims asserted and
the status of these various claims under the CAFC's opinion, a scorecard seems
in order:

The following claims of the '933 patent are
infringed but may be invalidated by the trial court for obviousness-type double
patenting:

3.
A non-naturally occurring glycoprotein product of the expression in a mammalian
host cell of an exogenous DNA sequence comprising a DNA sequence encoding human
erythropoietin said product possessing the in vivo biological property of
causing bone marrow cells to increase production of reticulocytes and red blood
cells.

7.
The glycoprotein product according to claim 3 . . . wherein the host cell
is a non-human mammalian cell.

8.
The glycoprotein product according to claim 7 wherein the non-human mammalian
cell is a CHO cell.

The following claim is infringed by Mircera® under the
doctrine of equivalents, but its status with regard to the obviousness-type
double patenting question is uncertain (it does not fall within the CAFC's
remand):

12. A pharmaceutical composition
comprising an effective amount of a glycoprotein product effective for
erythropoietin therapy according to claim 7 and a pharmaceutically acceptable
diluent, adjuvant or carrier. [Infringed under the doctrine of equivalents.]

The following claims of the '868 patent are both not
invalid and are infringed:

1. A process for the production of a glycosylated erythropoietin polypeptide
having the in vivo biological property of causing bone marrow cells to increase
production of reticulocytes and red blood cells comprising the steps of:

2. The process according to claim 1
wherein said host cells are CHO cells.

The following claims of the '698 patent are not
invalid and are infringed:

6.
A process for the production of a glycosylated erythropoietin polypeptide
having the in vivo biological property of causing bone marrow cells to increase
production of reticulocytes and red blood cells comprising the steps of:a)
growing, under suitable nutrient conditions, vertebrate cells comprising
amplified DNA encoding the mature erythropoietin amino acid sequence of FIG. 6;
and

b)
isolating said glycosylated erythropoietin polypeptide expressed by said cells.

9.
The process according to claims 2, 4 and 6 wherein said cells are mammalian
cells.

Claim 1 of the '422 patent is infringed but
may be invalidated for obviousness-type double patenting:

1. A pharmaceutical composition comprising a therapeutically effective
amount of human erythropoietin and a pharmaceutically acceptable diluent,
adjuvant or carrier, wherein said erythropoietin is purified from mammalian
cells grown in culture

.

Finally, infringement of claim 7 of the '349
patent will be decided in a new trial, but may be invalid under
obviousness-type double patenting:

1. Vertebrate cells
which can be propagated in vitro and which are capable upon growth in culture
of producing erythropoietin in the medium of their growth in excess of 100 U of
erythropoietin per 106 cells in 48 hours as determined by
radioimmunoassay, said cells comprising non-human DNA sequences which control
transcription of DNA encoding human erythropoietin.

The significance of the Federal Circuit's decision, and the
consequences of an adverse decision on remand for the '933, '349 and '422
patents are illustrated by the respective expiration dates of the five patents
at issue in the litigation:

*term shortened by terminal disclaimer

Thus, invalidation of the '933, '349 and '422
patents would reduce Amgen's patent protection on its various EPO products
(including Aranesp® and Epogen®)
from May 2015 to August 2012 (more than 3 years), which would have a
significant (negative) effect on the corporate bottom line.Accordingly, Amgen can be expected to
continue this litigation.

The CAFC's opinion did not disturb the permanent
injunction imposed by Judge Young, preventing Roche from marketing Mircera®
in the U.S. despite obtaining FDA approval in November, 2007, giving Roche more
than sufficient incentive to continue as well.

The substance of the Federal Circuit's opinion, including its
reasoning on the standards for obviousness type double patenting, will be the
subject of later posts.

May 17, 2009

Last Thursday, the Federal Circuit affirmed the decision of the District Court for the District of New Jersey denying a request by Altana Pharma and Wyeth (collectively "Altana") for a preliminary injunction to prevent Teva Pharmaceuticals ("Teva") from marketing a generic version of the antiulcer drug Protonix®.

The active ingredient of Protonix® is the compound pantoprazole, which belongs to a class of compounds known as proton pump inhibitors ("PPI") that are used to treat gastric acid disorders in the stomach. A predecessor company to AstraZeneca began commercializing the first PPI compound, omeprazole, in 1989 under the trade name Prilosec®. After Prilosec®'s success, many drug companies, including Altana's predecessor, began to develop new PPIs to compete with omeprazole. In conjunction with this research, and before the filing of the application that was the subject of this litigation, Altana filed an application that issued as U.S. Patent No. 4,555,518 (the '518 patent). The '518 patent does not disclose pantoprazole and is not related to the patent-at-issue. However, the '518 patent does contain a pharmacology section that compared the effectiveness of eighteen claimed compounds against four prior art compounds, and one of the claimed compounds (compound 12) is structurally very similar to pantoprazole. Altana subsequently filed an application claiming pantoprazole, and this application issued on February 9, 1988 as U.S. Patent 4,758,579 (the '579 patent). The Patent Office also granted a 5-year term extension pursuant to the Hatch-Waxman Act, and thus the '579 patent expires on July 19, 2010.

On or about April 6, 2004, Teva filed an ANDA with the FDA requesting approval to market a generic version of Protonix®. Sun filed similarly directed ANDA applications on or about March 1, 2005 and June 25, 2005. Both Teva and Sun filed Paragraph IV certifications in conjunction with their respective ANDAs, and Altana filed suit against both parties. The District Court consolidated these cases. Altana subsequently filed a motion for preliminary injunction on June 22, 2007, presumably near the expiration of the 30-month stay for FDA approval of Teva's ANDA application. In opposition, both Teva and Sun conceded infringement, but maintained that the '579 patent was invalid because it was obvious in light of the teaching in the following prior art references: (1) Altana's '518 patent, (2) the Sachs reference (3) the Bryson reference, and (4) the patent covering the omeprazole compound. The District Court denied the request for preliminary injunction because the Court found that Teva had demonstrated a substantial question of invalidity and that Altana had not shown that it lacked substantial merit. Specifically, the District Court found that one of skill in the art would have selected compound 12 from the '518 patent as a lead compound for modification, and that the additional references provided both the motivation to modify compound 12, and the teaching that such a substitution was feasible. In addition, the District Court rejected Altana's position that allowing generic entry into the market would cause irreparable harm. Based on these reasons, the District Court denied the motion for preliminary injunction.

The Federal Circuit began its analysis by highlighting that an appellant carries a heavier burden when seeking to reverse the denial of a preliminary injunction motion than when seeking to reverse the grant of a preliminary injunction motion. This is because the movant must show not only that one or more factors relied on by the district court was clearly erroneous, but that the denial of relief amounted to an abuse of the court's discretion. A court examines four factors when determining whether to grant a preliminary injunction:

(1) a reasonable likelihood of success on the merits;(2) irreparable harm if an injunction is not granted; (3) a balance of hardships; and(4) the impact on the public interest.

Essentially, a movant must establish the existence of both of the first two factors to be entitled to an injunction. Only these two first factors were at issue in the present case

Likelihood of Success on the Merits

At the preliminary injunction stage, an accused infringer must show a substantial question of invalidity. This burden is lower than what is required to prove invalidity at trial. If the accused infringer meets this requirement, the burden shifts to the patentee to show that the defense lacks substantial merit. Altana first argued that the District Court applied an incorrect standard. However, the Federal Circuit quickly dispensed with this argument, explaining why the District Court's standard was consistent with Federal Circuit precedent.

Altana also challenged the District Court's obviousness analysis on the merits. First, Altana argued that the District Court allowed defendants to select compound 12 of the '518 patent as a lead compound when the prior art suggested the availability of numerous other compounds. The general formula of the PPI at issue, as found in the '579 patent, is reproduced below:

The three main structural elements are the benzimidazole ring (left), the methylsulfinyl bridge (middle), and the pyridine ring (right). The issues in this case primarily relate to the R groups located on the pyridine ring. In fact, the only difference between pantoprazole and compound 12 of the '518 application is that pantoprazole has a methoxy group (–OCH3) at the R3 position, while compound 12 has a methyl group (–CH3) in the same position. In other words, the only difference between these two compounds is the substitution of an alkoxy group for an alkyl group. The District Court found that Teva raised a substantial argument that compound 12 was a natural choice for further development, and the Federal Circuit found that there was ample evidence supporting this finding. First, the '518 patent asserted that its compounds, including compound 12, were improvements over the prior art, specficailly omeprazole. In addition, the '518 patent disclosed that compound 12 was one of the more potent of the eighteen compounds provided. Moreover, the District Court considered the opinions of qualified experts, and relied on Teva's expert, Dr. Mitscher, that one of skill in the art would have selected the eighteen exemplary compounds of the '518 patent from which to pursue further development efforts. Finally, the District Court found that compound 12 was a natural choice for further developmental efforts because the '518 patent identified it as one of the more potent disclosed PPI compounds. The Federal Circuit noted that while potency of a compound is not dispostive, it was not unreasonable for the District Court to use this factor to conclude that one skilled in the art would have selected compound 12 from the group for further study. The Federal Circuit noted as apparent support for this proposition that Altana itself had selected compound 12 for further development efforts, but it is hard to see how such an observation does not amount to hindsight reasoning using the disclosure of the '518 patent to justify the obviousness determination.

It is important to keep in mind the procedural posture of this case in determining what precedential value it has. One clear conclusion, however, is that the Federal Circuit rejected Altana's suggestion that the prior art must point to only a single lead compound for further development efforts. Such a restrictive view of the lead compound test, the Court reasoned, would suffer the same fate of the rigidly applied teaching-suggestion-motivation test that was explicitly rejected by the Supreme Court in KSR. The District Court's flexible approach, therefore, concluding that Teva has raised a substantial question that one of skill in the art would have used the more potent compounds of the '518 patent, including compound 12, as a starting point was not clearly erroneous.

Altana also challenged the District Court's findings with respect to the teachings of one of the supporting references, the Bryson article. After focusing on the selection of compound 12 as a lead compound for modification, Teva argued that the Sachs article provided motivation to lower the pKa of a PPI to a value of 4 in order to provide better stability of the compound in the patient's body. Altana did not challenge the determination related to the Sachs article before the Federal Circuit. Teva further argued that the Bryson article taught that a methoxy group at the 3-position of a pyridine ring provides a lower pKa than a methyl group at the same position. The District Court agreed, but in doing so included erroneous statements regarding the pKa values of such methoxy group substitutions. For example, the District Court reported that Bryson stated that a methoxy group would have a pKa of 4, where in reality Bryson disclosed the values of 4.83 and 4.91. And, because the pKa values are measured on a logarithmic scale, even an apparently small difference results in a very substantial mathematical difference. Nevertheless, because Altana did not establish that such an error resulted in an abuse of discretion, the Federal Circuit did not disturb the District Court's decision on this ground. The CAFC found that even though the District Court erred in its representation of the pKa values, the reference to the values correlated with the difference in magnitude of the pKa values of the substituted pyridines described in Bryson. Moreover, the District Court relied on Teva's expert, Dr. Mitscher, who not surprisingly disclosed the correct pKa values. The District Court understood that the obviousness position depended on Byrson's teaching of a way to substantially lower the pKa value of the pyridine ring, and therefore the Court's determination was not an abuse of discretion.

Judge Newman concurred in the decision because of the discretionary weight that must be given to a district court's determination. However, it was her view that the evidence presented to the District Court in this case does not establish invalidity of the patent on pantoprazole. This just highlights the fact that the analysis and outcome of this case might have been different had it resulted from the District Court's determination of obviousness of the patent-at-issue rather than from the denial of a preliminary injunction.

Irreparable Harm

The Federal Circuit also found that there was no error in the District Court's determination that Altana would not suffer irreparable harm without the issuance of a preliminary injunction. Important in this determination were the facts that there was no indication that Teva could not respond in money damages, and that it was unlikely that Altana did not have a business plan to deal with the launch of generic competition. In fact, the District Court found it difficult to accept that Nycomed, who purchased Altana during the pendency of this case, had failed to account for potential generic launches. Altana argued that the District Court dismissed certain harms, such as price erosion, loss of market share, loss of profits, loss of research opportunities, and possible layoffs, as not irreparable. However, the Federal Circuit pointed out that a carful reading of the District Court's entire analysis reveals that the District Court correctly understood that these very factors can, in fact, support a finding of irreparable harm. It is also likely that Federal Circuit's analysis was influenced by the fact that Wyeth launched a generic version of pantoprazole, which is currently being distributed by Prasco, shortly after the denial of the preliminary injunction motion. The Federal Circuit noted that the District Court's determination that Altana's argument that its business would be crushed by the entry of a generic was exaggerated in view of the events subsequent to the expiration of the Hatch-Waxman stay. Of course, just because Wyeth launched its own generic version of pantoprazole does not necessarily mean that its business was not crushed by the denial of the injunction. Still, because the CAFC found that the District Court's determination was not clearly erroneous, the Federal Circuit affirmed.

January 01, 2009

Reflecting upon the events of the past twelve months, Patent Docs presents its second annual list of top biotech/pharma stories. For 2008, we identified a baker's dozen of top stories covered on Patent Docs. Today we will count down stories #13 to #10. On Sunday, we will present stories #9 to #6, and on Monday, we will count down the top five stories. As with last year's list, links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look. As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with our rankings, please let us know.

In the fall of 2007, a jury returned verdicts in Amgen Inc. v. F. Hoffmann-La Roche Ltd., finding five of Amgen's patents not invalid and three of these patents infringed by Roche's Mircera®, a form of recombinant EPO that has been covalently linked to polyethylene glycol. The District Court for the District of Massachusetts entered a preliminary injunction in February preventing Roche from putting Mircera® on the market. In granting the injunction, the Court found that Amgen had satisfied all but the public interest prong of the classic four-factor test discussed in eBay Inc. v. MercExchange, L.L.C. The District Court struggled with the public interest prong of the test, in view of Roche's argument that the public interest was served, at least in part, by the presumed reduced price that would ensue from competition between Mircera® and Amgen's Epogen® and Aranesp® products. The Court, expressly refraining from entering any findings on the fourth prong, left open the possibility that the injunction could be modified under a handful of conditions. Roche agreed to the Court's conditions, but Amgen did not, and the Court subsequently appointed a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared. Roche responded to the Court's appointment of the special master by filing a Notice of Appeal. On October 2nd, the Court issued a 150-page opinion in the case, handing victory to Amgen, and eight days later, the Federal Circuit affirmed the preliminary injunction without opinion.

Last year, drug pricing and compulsory licensing in the developing world took the #10 spot on our list of top stories. The fact that this story dropped two places on this year's list should not, however, be taken to mean that developing countries and the pharmaceutical industry have reached accord regarding this issue. For example, in February, Novartis responded to Thailand's threats to issue a compulsory license by agreeing to supply its cancer drug Gleevac® (imatinib mesylate) at no cost to Thai patients -- provided that the Thai gvernment did not issue any compulsory licenses. One month later, Thailand instead announced that it would maintain its compulsory licensing policy for Gleevac® as well as three other anti-cancer drugs (Novartis' Letrozole®, Sanofi-Aventis' Docetaxel®, and Roche's Erlotinib®). The use by developing countries of tools provided in international agreements such as GATT, TRIPS, and the Doha Declaration (e.g., compulsory licensing and parallel importing) will no doubt continue to be a hotly debated in 2009.

When your backlog of unexamined applications rises from 760,924 to 771,529, as it did for the USPTO in 2008, you should be searching for all reasonable ways to reduce that backlog. Last year, the USPTO attempted to address its application backlog by focusing on the development of a number of worksharing programs with foreign patent offices. In particular, the USPTO expanded its Patent Prosecution Highway (PPH) program to include pilots with the Canadian Intellectual Property Office (CIPO), Korean Intellectual Property Office (KIPO), IP Australia (IPAU), European Patent Office (EP), and Danish Patent and Trademark Office (DKPTO); extended its PPH pilot program with the CIPO; entered into an agreement with IPAU, in which the IPAU will act as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) for certain International applications filed with the USPTO Receiving Office; added the KIPO as a participating foreign patent office in the Priority Document Exchange (PDX) system; initiated the "Triway" worksharing program between the USPTO, EPO, and JPO; initiated the "New Route" worksharing program with the JPO; announced a new worksharing initiative with the KIPO, EPO, JPO, and State Intellectual Property Office of the People's Republic of China (SIPO); and released information about a Common Application Format (CAF) that arose out of an agreement between the USPTO, EPO, and JPO at the 25th Annual Trilateral Conference.

On September 30th, the District Court for the District of Columbia issued a decision in Wyeth v. Dudas that could eventually impact the manner in which Patent Term Adjustment (PTA) determinations are made. In particular, the Court granted summary judgment in favor of Wyeth, determining that the USPTO had misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a portion of patent term to which it was entitled. Less than a month later, USPTO Director Jon Dudas filed a Notice of Appeal in the District Court for the District of Columbia, appealing the Court's decision in Wyeth to the United States Court of Appeals for the District of Columbia Circuit, thus indicating how the Office would rule on requests for reconsideration being filed by patentees that had been similarly deprived of patent term. Having no other recourse under 35 U.S.C. § 154(b)(4)(A), which requires patentees to file actions seeking corrected PTA determinations within 180 days of a patent's issuance, Napo Pharmaceuticals, Inc.; Ironwood Pharmaceuticals, Inc.; Solvay Pharmaceuticals GmbH; Biogen Idec Inc.; Purac Biochem B.V.; and Molecular Insight Pharmaceuticals, Inc. all followed Wyeth's lead by filing lawsuits against Director Dudas this fall.

December 30, 2008

There are the inklings of a stratagem taking shape in certain of the Federal Circuit's decisions since the spate of Supreme Court rejections of large portions of its jurisprudence. That stratagem involves refusing to overturn district court decisions based on applying an abuse of discretion standard, as evidenced in the Federal Circuit's decision to affirm grant of a permanent injunction in Acumed LLC v. Stryker Corp.

The case involved a patent to an orthopedic nail used to reconstruct and stabilize a broken humerus. The CAFC previously vacated a permanent injunction granted prior to the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C., which mandated that the traditional "four factor" test for granting injunctions was to be applied in patent cases. This mandate overruled the Federal Circuit's "general rule [in patent cases] that an injunction will issue, once infringement and validity have been adjudged . . . unless there are some exceptional circumstances that justify denying injunctive relief." Thus, the District Court revisited the issue based on a proper application of the law and arrived at the same conclusion.

In making its determination that a permanent injunction was permissible in this case, the District Court considered together the four-factor test prongs of whether there was irreparable harm to patentee Acumed and whether the remedy at law (money damages) was adequate compensation as a remedy. Stryker presented evidence that Acumed previously had granted licenses for the patent-in-suit (U.S. Patent No. 5,472,444) to two other competitors, Smith & Nephew and Zimmer. The District Court distinguished this behavior on the grounds that, first, Acumed had granted the Smith & Nephew license to settle litigation, and second, that Zimmer was not direct competitor when Acumed granted it a license.

The Federal Circuit, in a unanimous opinion written by Judge Lourie and joined by Judges Mayer and Gajarsa, found none of this to be an abuse of discretion. The Court asserted that eBay itself stated that a patentee's willingness to license patents to others was not sufficient by itself to preclude a determination that a patentee would be irreparably harmed or that money damages would be an insufficient remedy. The Court asserted that prior licenses were but one factor a court could consider in deciding whether the evidence favored vel non grant of a permanent injunction. "Adding a new competitor to the market may create an irreparable harm that the prior licenses did not," according to the Court. In a footnote, the Court noted that it did not consider whether an injunction would be appropriate in other circumstances where a patentee had granted licenses to third parties, thus avoiding creation of any per se rules in this regard.

Regarding the balance of the hardships, the District Court was persuaded by Acumed's evidence that Stryker had available a non-infringing alternative (a straight rather than a curved humeral nail), and that Stryker was the world's largest orthopedic implant company (so sales of its infringing humeral nail were only a small portion of its sales, whereas the Acumed nail was its flagship product). The District Court rejected Stryker's argument that a permanent injunction would cause harm to itself, its customers and patients, as well as Stryker's argument that Acumed would benefit from receiving a royalty, since it would gain access to Stryker's "otherwise inaccessible" customers. The Federal Circuit found none of the District Court's reasoning to be error or an abuse of discretion. Stryker's evidence of the expense incurred in designing and marketing were irrelevant to the hardships determination, according to the CAFC, because "[o]ne who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected," citing Windsurfing Int'l. Inc. v. AMF, Inc., 782 F.2d 995, 1003 n.12 (Fed. Cir. 1986). The Federal Circuit also found no abuse of discretion in the District Court's determination that Stryker's failure to introduce into the U.S. a straight-nail embodiment of its humeral nail was a business decision that did not tip the balance of hardships in Stryker's favor.

For the fourth factor, the public interest, the District Court found that this factor did not mitigate against the permanent injunction. Stryker argued that its infringing humeral nail was "demonstrably safer and superior" to Acumed's product, citing trial testimony from five expert witnesses. Stryker also contended that Acumed's product had specific deficiencies compared with its infringing product. The District Court found that Stryker had not established "sufficient objective evidence of any public health issue" that would turn the public interest prong of the four-factor test in its favor. The lower court also noted that "there was 'considerable dispute at trial' whether Stryker's evidence was the product of biased experts." Finally, the District Court found that there were non-infringing alternatives to Acumed's product (ironically, the Zimmer and Smith & Nephew licensed products) available to satisfy any portion of the market Acumed was incapable of serving, so that patients would not be harmed by the injunction. The Federal Circuit credited all these decisions as being within the sound discretion of the trial court, and found none of them to be an abuse of discretion.

Perhaps it is the proper role of an appellate court to defer so assiduously to the decisions made by a district court that rely heavily of factual determinations depending on the demeanor and believability of witnesses, live testimony, and trial advocacy relating thereto. And perhaps it has been the tendency of the Federal Circuit in many areas, most notably claim construction, to refuse to so defer, or to provide reasoning supporting its lack of deference (such as its Congressionally-mandated role of providing consistency and harmony to patent law) that makes it appear unusual that the Federal Circuit is so compliant with regard to the district court's assessment and balancing of the evidence in granting the injunction. An inescapable consequence of this compliance, however, is that Federal Circuit also avoids any substantive decision-making in affirming the injunction, based on an abuse of discretion standard it defines as "a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings." Using this standard makes it less likely that there will be any readily-reviewable basis for the Supreme Court to grant certiorari in a case like this. Avoiding another opportunity for its jurisprudence to be overruled may be all the justification the CAFC needs to be deferential for a while.

October 28, 2008

The Court of Appeals for the Federal Circuit affirmed grant of a preliminary injunction in Abbott Laboratories v. Sandoz on October 21, and also affirmed the District Court's determination that the patents-in-suit were not rendered unenforceable by inequitable conduct during prosecution (although defendant Sandoz will be able to pursue this defense at trial). In coming to both conclusions, the majority decision illustrated nicely the appellate penchant (and prerogative) of deciding where lines are to be drawn when considering equitable issues.

Abbott's patents-in-suit, U.S. Patent Nos. 6,010,718 and 6,551,616, relate to extended release formulations of clarithromycin, the active ingredient in Abbott's Biaxin® XL product. Abbott filed suit after Sandoz file an ANDA having a Paragraph IV certification that Abbot's patents were invalid or unenforceable.

Claim 1 of the '718 patent is representative:

1. A pharmaceutical composition for extended release of an erythromycin derivative in the gastrointestinal environment, comprising an erythromycin derivative and from about 5 to about 50% by weight of a pharmaceutically acceptable polymer, so that when ingested orally, the composition induces statistically significantly lower mean fluctuation index in the plasma than an immediate release composition of the erythromycin derivative while maintaining bioavailability substantially equivalent to that of the immediate release composition of the erythromycin derivative.

As are claims 1 and 2 of the '616 patent (which is a continuation-in-part of the '718 patent):

2. The method according to claim 1, wherein the erythromycin derivative is clarithromycin.

The District Court granted Abbott a preliminary injunction "to preserve the status quo" using the conventional four-factor test: whether there was a "(1) likelihood of success on the merits of the underlying litigation, (2) whether irreparable harm is likely if the injunction is not granted, [considering] (3) the balance of hardships as between the litigants, and (4) factors of the public interest." The Federal Circuit reviewed the grant of preliminary injunction based on an abuse of discretion standard. Sandoz alleged that Abbott's claims were anticipated and/or obvious over several prior art references, which the District Court found were not sufficient to establish that the claims were invalid. An interesting feature of the District Court's analysis was a reconsideration of the obviousness question in view of the Supreme Court's KSR v. Teleflex decision, which came down after the District Court originally considered Sandoz's obviousness contentions.

The question decided by the Federal Circuit was not concerned with the merits per se of the District Court's decision on the substantive question of whether Abbott's claims were anticipated or obvious; the panel found no clear error in the lower Court's factual determinations and no errors of law in its legal conclusions. The Federal Circuit also found no error in the District Court's claim construction or determination that Abbott was likely to establish at trial that Sandoz's product infringed at least one asserted claim of the patents-in-suit. Rather, the question before the Federal Circuit was the extent of the showing sufficient to preclude a district court from granting a preliminary injunction based on the likelihood of success on the merits prong of the four-factor test. This discussion was cast in Section VI of the decision, where Judge Newman was joined in her opinion upholding the injunction by Judge Archer, and from which Judge Gajarsa dissented.

Judge Newman (at left) rejected Sandoz's contention, and the dissent's, that a defendant must merely "[raise] a substantial question concerning either infringement or validity" to render grant of a preliminary injunction to be an abuse of discretion. Rather than being merely a question of whether a defendant could show claims were "vulnerable" to an invalidity challenge, at this stage Judge Newman said that sound precedent made the question whether there was a likelihood of success on the merits. In making this determination, the opinion sets forth what Judge Newman termed "the law governing the grant of a preliminary injunction." This precedent includes Supreme Court, "every regional circuit, and controlling Federal Circuit precedent," including Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367 (Fed. Cir. 2005); Ranbaxy Pharmaceuticals., Inc. v. Apotex, Inc., 350 F.3d 1235 (Fed. Cir. 2003); Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552 (Fed. Cir. 1994); and Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983). The opinion characterized a "substantial question" as "more than a scintilla but less than a preponderance of evidence in support of its side," and further noted that there are also equitable factors that "are of particular significance at a preliminary stage," citing University of Texas v. Camenisch, 451 U.S. 390 (1981), and that a court must consider these factors in addition to whether a defendant has raised a "substantial question." The opinion also cited the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), that patent cases are not deserving of unique treatment" when courts consider these equitable factors in deciding whether to grant a preliminary injunction.

The opinion then sets forth what the dissent characterizes as "a superfluity of citations" to decisions from all the regional circuits and the Supreme Court in support of it thesis that the "likelihood of success on the merits" is the principal criterion used by district courts in deciding whether to grant a preliminary injunction, and by reviewing courts when deciding whether a lower court has abused its discretion. The opinion specifically cites Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed. Cir. 1988); Roper Corp. v. Litton Systems Inc., 757 F.2d 1266 (Fed. Cir. 1985); Pretty Punch Shoppettes, Inc. v. Hauk, 844 F.2d 782 (Fed. Cir. 1988); Nutrition 21 v. United States, 930 F.2d 867 (Fed. Cir. 1991); and Texas Instruments Inc. v. Tessera, Inc., 231 F.3d 1325 (Fed. Cir. 2000) (as well as another dozen cases) as Federal Circuit precedent in support of the "likelihood of success" standard for preliminary injunctive relief, all of which are in accord with the principles the Supreme Court enunciated in eBay, according to the majority opinion. The opinion contrasts this standard with the adequacy of the "substantial question" standard for averting judgment on the pleadings or summary judgment, citing Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988).

The dissent takes the opposite position, and Judge Gajarsa (at right) has a number of Federal Circuit opinions in support of the "substantial question" standard. Like the majority opinion, the dissent focuses on the first prong, the need for a plaintiff patentee to show a likelihood of success on the merits for a court to grant an injunction. Judge Gajarsa opines that the District Court abused its discretion because Sandoz
had raised enough of a question on the validity of the patents-in-suit
to preclude Abbott from satisfying the "likelihood of success" prong of
the preliminary injunction standard. He emphasizes that the burden is on the patentee, in view of the "extraordinary nature of the relief" sought (i.e., an injunction) to establish this prong. However, if a defendant "raises a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove 'lacks substantial merit,' the preliminary injunction should not issue," citing Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343 (Fed. Cir. 2001). The dissent bases its argument that a showing by a defendant that claims are "vulnerable" is supported by language from Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331 (Fed. Cir. 2006) (quoting Amazon):

In resisting a preliminary injunction, however, one need not make out a case of actual invalidity. Vulnerability is the issue at the preliminary injunction stages, while validity is the issue at trial. The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to establish invalidity itself.

The differences in opinion, and copious citation of authority by both the majority and the dissent, perhaps suggest that there is a split in the Federal Circuit's jurisprudence that requires the Court to revisit this question en banc (or for the Supreme Court to weigh in on the quanta of evidence required to uphold vel non the likelihood of success on the merits for preliminary injunctions). It is equally likely, however, that these cases illustrate how courts must balance the evidence presented by each party in making a determination of whether the patentee is likely to succeed on the merits. The majority and dissent each assert different opinions on whether Sandoz's obviousness contentions have merit and raise a "substantial question" of invalidity. For the majority, the deficiencies in Sandoz's evidence lead to the conclusion that Abbott is likely to prevail on the merits, and hence the majority upholds the District Court's grant of a preliminary injunction. The dissent, on the other hand, believes Sandoz's contentions have merit, and that granting a preliminary injunction under these circumstances is an abuse of discretion. The perhaps inevitable consequence of this equitable balancing is that the Federal Circuit applies its "abuse of discretion" standard to questions of whether a district court's grant of a preliminary injunction is upheld or overturned by substituting (or imposing) its judgment for the judgment of the district court. It is reasonable to ask, as it has been asked in other contexts, whether the Federal Circuit's mandate justifies this result, and whether its penchant for so extending its plenary authority is contrary to the behavior and outcome in the other regional circuit courts of appeal. It is also reasonable to ask whether this penchant is precisely the kind of jurisprudence that has so motivated the Supreme Court to review, and reverse, the Federal Circuit so often over the past ten years.

The Federal Circuit considered none of Judge Young's findings of fact and conclusions of law, maintaining that none of these issues were before the CAFC since Judge Young was precluded from entering a final judgment until after the Federal Circuit made its decision and returned jurisdiction to the District Court. These decisions by the District Court included: 1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims 3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting the term "human erythropoietin"; and 5) granting Amgen a permanent injunction. Previous Patent Docs posts have discussed the obviousness-type double patenting (Part I) and permanent injunction (Part II) aspects of the District Court's decision. Here, we discuss some of the remaining grounds for the Court's deciding this case in Amgen's favor.

The Court denied Roche's motions for judgment as a matter of law (JMOL) that Amgen's claims were invalid. Although the Court noted that Roche's motion raised issued of invalidity on the grounds of anticipation, obviousness, indefiniteness, and non-enablement, the Court addressed two of these arguments: first, that the claims of the '422 patent were anticipated by the Goldwasser study, and second that the term "human erythropoietin" is indefinite.

Regarding the anticipation argument, this was ground well-traveled and familiar to the Court. Hoechst Marion Roussel (HMR) used the same prior art study of Goldwasser to support the same anticipation argument in Amgen Inc. v. Hoechst Marion Roussel, Inc., and the court there, as the Court here, found claim 1 of the '422 patent not to be anticipated when the Goldwasser study was applied as a § 102 reference. In this case, the Court gave effect to the limitation "purified from mammalian cells grown in culture" to distinguish over the Goldwasser EPO preparations that were made from urine, as a matter of law based on the Court's claim construction. The Court construed claim 1 of the '422 patent as reciting 5 elements:

The Court said that Roche tried to improperly shift the invalidity burden to Amgen, by arguing that Amgen was required to show that the "source" limitation "imparts novel structure to an otherwise non-novel product." As for the propriety of finding that the process/source limitation was a substantive limitation, the Court found that it was a well-established way of distinguishing claimed subject matter over the prior art. This conclusion was based, in part, on Dr. Lin's testimony that "'the only way [to] characterize [his claimed] product is by the way they were making [it]'." This claim construction was affirmed by the Federal Circuit in Amgen Inc. v. Hoechst Marion Roussel, Inc. (although in that case the issue was whether the term could be construed to mean that the EPO product was purified from the culture media as opposed to being purified from the cells themselves). The Court also noted that there were "observed distinctions" between "recombinant EPO [rEPO] and the urinary EPO [uEPO] employed by Goldwasser." These included what the Court termed "critical distinctions" in glycosylation and specific activity in vivo, which "may . . . reflect recombinant EPO's resistance to degradation in the human body," which the Court cited as reasons for imbuing the source limitation as a real limitation on the EPO product claim

"It is also significant that the source is what enables mass production and commercial viability," according to the Court. In the Court's view, the simple fact is that the prior art Goldwasser method would require a drug manufacturer to "scour the world" for aplastic anemia patients whose urine could be processed to produce purified uEPO, "transforming the company into a glorified urine collection agency." The "genius," in part, of rEPO is that it frees drug manufacturers from this dependency on urine as a source of EPO, according to the opinion.

Procedurally, the Court also disagreed with whether the issue was a question of fact for the jury, casting the question not as whether Amgen's claim 1 of the '422 patent was anticipated but on the question of claim construction. The Court said that Roche's arguments were contrary to Markman v. Westview Instruments, Inc., wherein the meaning of claims is a question of law solely within the province of the court. According to the District Court, having construed the "purified from mammalian cells grown in culture" limitation as discussed above, no jury could decide that the Goldwasser reference anticipated, since Goldwasser taught uEPO, and the Court cited In re Luck for the principle that process limitations in a product claim "must be given the same consideration as traditional product characteristics."

The Court also based its decision on its conclusion that imposing on Amgen the burden argued by Roche would contravene the statutory presumption of validity. The Court distinguished Roche's authority to the contrary, In re Moeller, 117 F.2d 565 (CCPA 1941), by pointing out that the Moeller case was an appeal from a decision of the PTO Board of Appeals, where the presumption of validity does not apply. The Court was also unpersuaded by Roche's argument that the distinctions between rEPO and uEPO were undefined, and that it was possible that an rEPO preparation could be identical to the uEPO preparation of Goldwasser, saying that any such speculation failed to satisfy Roche's burden of establishing invalidity by clear and convincing evidence.

Finally, the Court noted that its construction, that the source is a substantive limit on the product in the claim, has been twice appealed to the Federal Circuit and twice affirmed:

As to the '422 patent, the limitation "purified from mammalian cells grown in culture" in claim 1 clearly limits the source of the EPO used in the claimed "pharmaceutical composition." The limitation only speaks to the source of the EPO and does not limit the process by which the EPO is expressed. Rather, the claim is broadly drawn to a "pharmaceutical composition" having certain elements, one of those being EPO "purified from mammalian cells in culture." This reading is in line with the district court's construction.

Turning to Roche's allegations that the claims of the '422 patent (claim 1) and '933 patent (claims 3, 7, and 9) were indefinite for reciting "human erythropoietin," the Court said that the "touchstone" of the indefiniteness inquiry is whether the skilled worker would understand what was being claimed. This question, according to the Court, was addressed by competing expert testimony (Dr. Lodish for Amgen and Dr. Flavell for Roche). However, the Court said that its role was not to re-weigh the evidence but to determine whether the evidence provided "a sufficient basis for a reasonable jury to conclude Roche failed to prove indefiniteness by clear and convincing evidence." The Court found that it did, saying that the claims are sufficiently definite even if the specification is unclear on whether it is 165-166 amino acids. Part of the basis for the Court's decision is that "in fields of new and evolving knowledge . . . claims can be no more precise than the knowledge of the field permits" (citing PharmaStem Therapeutics Inc v. Viacell, Inc., 491 F.3d 1342, 1373 (Fed. Cir. 2007)). Roche argued that the disclosure in the specification of undefined "mutants, analogs and allelic variants" as falling within the scope of the term "human erythropoietin" was enough to render the term indefinite, and the Court disagreed. The Court also opined that Roche's "focus on the number of amino acids" (165 or 166) was "misplaced," since the Court's construction of the phrase did not require that the amino acid sequence have a precisely-defined length.

Finally, the Court denied Roche's motion for JMOL on the question of infringement, based on evidence that Roche's Mircera® drug product contained erythropoietin that fell within the scope of Amgen's claims. In doing so, the Court rejected Roche's theory that Mircera® should be considered as a "single molecule" (i.e., peg-EPO), but rather characterized it as rEPO modified by conjugation with polyethylene glycol. In the Court's view, "[p]egylation merely attaches a sugar, via a single carbon bond, to a recombinant glycoprotein with the patented amino acid sequence; it does not alter the patented properties of EPO." This alteration was not sufficient for the Court to overturn the jury verdict of infringement. In support of its decision, the Court cited testimony, internal Roche documents, and Roche's representations to the FDA to the effect that peglylating rEPO did not change its "amino acid sequence, glycosylation or carbohydrate content," i.e., that Mircera® retained rEPO's biological properties.